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PMS or Mutual Funds – Which One is the Best?
Reviewed by: Fibe Research Team
- Updated on: 25 Nov 2025
Reviewed by: Fibe Research Team
When it comes to building long-term wealth, investors often wonder whether to choose mutual funds or Portfolio Management Services (PMS) or both. While both are popular investment options, they cater to different investor segments, offer different levels of control and come with varying costs and returns.
Let’s explore what each of them means, how they differ and which might suit your risk profile and financial goals better.
A Portfolio Management Service (PMS) is a professional investment service where qualified portfolio managers manage your investments on your behalf. In simple terms, it’s like hiring an expert to make personalised investment decisions for you.
PMS is primarily designed for high-net-worth investors (HNIs) who want customised portfolio management, unlike mutual funds, where all investors in a scheme have the same portfolio.
Mutual funds are investment tools that pool money from many people to invest in a diverse portfolio of stocks, bonds and other assets. These funds are managed by experts and regulated by SEBI, ensuring transparency and investor protection.
Mutual funds are accessible to all investors, whether you’re a beginner or an experienced investor, because you can start with as little as ₹500.
To understand which option might be best for you, let’s compare PMS vs mutual funds across important parameters.
| Feature | Portfolio Management Service (PMS) | Mutual Funds |
|---|---|---|
| Minimum Investment | ₹50 lakhs (as per SEBI) | As low as ₹500 |
| Ownership | Direct ownership of securities | Indirect, via pooled funds |
| Customization | Highly personalized | Standardized portfolio |
| Regulation | SEBI (through PMS regulations) | SEBI (Mutual Fund Regulations) |
| Fees | Higher (management + performance fee) | Lower (expense ratio) |
| Liquidity | Limited | High (easy redemption) |
| Risk | High due to concentrated bets | Moderate due to diversification |
| Taxation | Direct capital gains | Fund-level taxation (depends on type) |
When evaluating PMS funds in India, it’s important to remember that returns can vary significantly depending on the strategy and market conditions.
Historically, PMS returns have often outperformed mutual funds during bullish markets due to active management and concentrated positions. However, during volatile or bearish markets, the same concentration can lead to higher downside risk.
In contrast, mutual funds tend to offer more stable, consistent returns due to diversification across sectors and stocks.
Thus, the right choice depends on whether you prioritise high potential returns with higher risk or steady growth with controlled volatility.
Choosing between PMS and mutual funds largely depends on your risk profile and investment objectives.
Yes, if your portfolio size and goals allow it, investing in both PMS and mutual funds can be a smart strategy. Here’s why:
If you’re planning your next investment move or want to manage your liquidity better, Fibe can help you stay financially agile. With Fibe’s Instant Personal Loan of up to ₹5 lakhs, you can invest strategically without disturbing your savings.
The process is fast, paperless and entirely digital; just download the Fibe App or visit fibe.in to get started.
It depends on your investment amount and risk profile. PMS offers higher customisation and potentially better returns, while mutual funds provide easier access and diversification.
Yes, you can invest in both if your financial goals, capital and risk tolerance permit. PMS or direct stocks can enhance returns, while mutual funds help stabilise your portfolio.
