- June 18, 2026
- Noah
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The growth has coincided with the launch of several MF-focused PMS offerings. Firms such as Dezerv, Capitalmind and Vallum Capital, along with newer entrants such as PrimeInvestor, use the PMS structure to create and manage portfolios of MF schemes for clients.
With asset allocation gaining prominence, MF schemes are increasingly finding a place within broader PMS strategies. According to experts, PMS managers are warming up to sectoral and commodity exchange-traded funds (ETFs), as well as other MF products, to provide targeted exposure to specific themes and asset classes and build diversified multi-asset portfolios for clients.
PMS players offering MF-based products expect the segment to continue growing, citing advantages such as tax efficiency, lower costs and better diversification compared with other wealth management solutions.
“Direct MF investing through the PMS route is structurally superior as it combines three advantages simultaneously — lower costs, better tax efficiency and greater flexibility in portfolio construction,” said Manish Bhandari, chief executive officer and portfolio manager, Vallum Capital.
Sandeep Jethwani, co-founder of Dezerv, said MF-based PMS products provide a unique proposition wherein the PMS manager takes complete control over both the decision-making and execution process on behalf of the client.
“In most arrangements, the investor still carries the decision and the execution himself. In a PMS, we take both on your behalf. There is no gap between what should be done and what actually gets done,” he said.
Srikanth Meenakshi, co-founder of PrimeInvestor, also attributed the growing traction to the ease of investing provided by PMSs.
“Investors can choose a distributor route, a registered investment adviser (RIA) route, or a PMS route to manage their portfolios. The advantages of the PMS route are many. For one, you have a single entity that takes care of the design, management and execution of the portfolio. It is truly fire-and-forget from an investor’s perspective,” he said.
The PMSs offer direct plans of MF schemes, while also making greater use of passive funds, both of which are low-cost MF offerings. The savings made through these and low churn, they say, compensate for much of the fee charged by the PMS.
“We invest only in direct plans, so the underlying cost stays at the lowest tier, with a blended expense ratio of around 0.64 per cent. Clients choose either a fixed fee (up to 1 per cent) or a performance fee (up to 10 per cent), never both layered together. We also rebalance with discipline. Turnover is roughly 25 per cent a year, and only when the benefit clearly outweighs the cost. That keeps churn, and the tax drag, low,” said Jethwani.
Manuj Jain, co-founder, ValueMetrics Technologies, said expert portfolio management, cost efficiency and the growing realisation of the importance of asset allocation will likely lead to strong growth in such offerings.
“If managed well, the additional costs arising from fees and portfolio churn can potentially be justified through better asset allocation decisions, disciplined rebalancing and timely investment decisions. Periods of uncertainty often reinforce the value of professional hand-holding and disciplined decision-making. As investing becomes increasingly asset allocation-driven, MF-based PMSs can emerge as a meaningful growth channel for the mutual fund industry alongside traditional distribution avenues,” he said.
