Moneylife online survey on PMS shows large-scale

underperformance and gross mismanagement by PMS

companies. While many investors may not have
invested due to lack of data for making an informed
decision, a majority of those who have invested, say
they lost money
There are 253 portfolio management schemes (PMS) offered
by various portfolio managers, brokers and asset
management companies, registered with the Securities and
Exchange Board of India (SEBI). Moneylife has been
campaigning to bring some transparency in how PMS
performance data is reported. However, we also wanted to
capture the experience of the investors of PMS in our cover
story, Portfolio Management Schemes: Will Your Portfolio Blow
Up?, through an online Survey. Our Survey received
responses from 360 participants out of which nearly one-third
have invested in PMS schemes. Here is a summary of the
responses.

According to the Survey, lack of disclosure and poor

performance are the main cause of concern for the investors
which puts them off. As many as 35% said that they were not
convinced if their PMS would deliver good returns. A
disturbing 45% of the respondents who have invested in PMS
say that they were unable to make an informed decision
because of lack of data. Just 15% respondents of our survey
said that they compared various schemes before investing.

More than half of those who invested in PMS schemes said

they have lost their money. When we asked to name the PMS
company in which they have lost money, there was no clear
poor performing fund house; the names varied from HSBC
Wealth Management to JM Financial and Kotak Mahindra PMS
to HDFC PMS. Similarly when we asked which was the best
PMS company, there was no clear winner either. As many as
65% of the respondents, who have invested, claim that
returns were below the benchmark. A mere 5% say that they
got returns better than the benchmark. Nearly half the
respondents, who have invested, mentioned that their
portfolio was churned excessively. This gross
mismanagement certainly does not go down well with
investors. Nearly 60% of the participants who have invested
in PMS have stopped investing altogether. An equivalent
proportion of respondents say that they will never
recommend PMS to others.

While one-fourth of PMS investors have invested in multiple

schemes, an equivalent number of investors were not sure of
what kind of service (discretionary, non-discretionary,
advisory) they have opted for. Were they greedy or foolish or
both? Bankers have a major role to play in selection of PMS.
Many abuse the trust of the clients and take them for a ride.
In our survey, one-third of the respondents who have
invested got to know of PMS through their bank relationship
manager or wealth manager. Nearly one-fifth came to know

of a PMS through a friend or a colleague and an equivalent

number got to know of PMS through advertisements.

In terms of transparency, nearly 30% say that all portfolio

details, charges and returns were not disclosed adequately.
As many as 60% of the respondents who have invested in
PMS mention that portfolio managers did not make smart
investment decisions. But still, nearly 45% of the respondents
feel that their PMS will deliver a return over 15% in the next
five years. Nearly 75% of the respondents, who have
invested in PMS, have done so over the last five years.
Despite the complaints of gross mismanagement by PMS
companies, just 2% have filed a complaint with the regulator.