The ED & CIO Equities, DHFL Pramerica AMC, E.A. Sundaram, tells us that the time is right for looking at PMS as an alternative asset class.
Pointing out that PMS has shown growth in the past few years, the ED & CIO says that it is important to position PMS in the right way. “Selling PMS as a product superior to mutual funds comes with many risks and must be avoided. I want to make it clear that PMS is not a competitor to mutual funds, but is meant to complement it,” he says.
Explaining his comment, Sundaram adds, “While mutual funds invest based on when an investment will start giving returns, PMS concentrates on why. This basic difference in ideology makes PMS look at those sections where MF is unable to. PMS ideally fills up the investment gaps that mutual funds are unable to address. It is neither superior nor inferior to any mutual fund. It is simply different.”
Talking about the performance of PMS, E.A. Sundaram says that between March and December 2016, portfolio management services have seen a growth of 31.06%, when compared to 21.55% of MF Equity. He says, “The PMS industry AUM has grown at a faster pace than MF industry equity AUM in FY 2016-2017. In fact, the discretionary equity PMS industry AUM has more than doubled in the last 2 years. PMS flows are now a substantial part of the asset management industry. This is expected to increase in the years to come.”
Supporting his conviction about the opportunities for growth available to PMS, Sundaram quotes a McKinsey report, which shows that the number of Ultra HNIs and HNIs will increase by 11,155 or 19.65% by 2025. The report says, in 2025 there will be 9.5 million ultra-rich and 33.1 million rich households in India. This, along with the findings of a Karvy wealth report, which says that Indians prefer investing in alternative assets when compared to equity, forms a strong case for PMS in India, says the ED & CIO of DHFL Pramerica.
