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Majority of portfolio managers offer two types of solutions: discretionary PMS and non-discretionary PMS.
While the fund manager has complete control over the investor’s investment decisions in discretionary PMS, the portfolio manager requires the investor’s permission to carry out any investment decision in non-discretionary PMS. In simple words, discretionary PMS is somewhat like mutual funds but with greater flexibility.
Cafemutual spoke to a few PMS experts to understand whether they prefer recommending discretionary or non-discretionary PMS. Let us look at what they said:
Daniel GM, Founder – Director, PMS Bazaar prefers discretionary PMS over the non-discretionary PMS. He said, “If an investor is highly knowledgeable and can devote regular time to keep a check on his investment, he should go with non-discretionary PMS. However, data shows that non-discretionary PMS did not perform well over the past few years. Discretionary PMS, on the other hand, has been yielding better results over the years due to the expertise of a dedicated portfolio manager.”
Vijay Choudhary, Director, Renaissance Investment Managers feels that non-discretionary PMS is comparatively more risky than discretionary PMS. He said, “In my view, investors should go with discretionary PMS as they are less risky and take care of individual biases. However, investors should look at PMS with a good track record.”
Deepak Jaggi, Co-Founder and MD, Satco Wealth believes that investors require in-depth knowledge for non-discretionary PMS. He said, “Majority of the investors choose discretionary PMS. Many ultra HNIs with business backgrounds prefer non-discretionary routes as they have adequate resources to keep a close watch on the market and have an in-depth understanding of its parameters. So, both strategies work well for different clients.”
Dhruv Mehta, Founder and Chairman, Sapient Wealth said that discretionary PMS are more flexible. He said, “Discretionary PMS is a better option for investors. PMS allows greater flexibility to fund managers and they can take concentrated bets. Considering the risky nature of PMS due to these two factors, it is better to invest with the help of fund managers through the discretionary route.”
Considering the growth of PMS industry, Cafemutual is hosting an event titled 'Cafemutual Alternates' on August 23, 2024, at the Taj Santacruz in Mumbai.
The event will provide insights into opportunities in the distribution of alternative products within the PMS industry. For those interested in emerging trends and networking with industry professionals, this event is a great opportunity. Click here to register.