Should You Invest in PMS as Well as Mutual Funds?

Published on: March 11, 2026

Should You Invest in PMS as Well as Mutual Funds

When it comes to investing in equities in India, there are two investment options that are quite popular. They are Mutual Funds (MFs) and Portfolio Management Services (PMS). Both allow you to invest in the same equities, but behind the scenes, there are quite a lot of differences. Right from the way your portfolio is created, there are quite a lot of differences.

One is created by experts, but there is only one way of creating the portfolio. With PMS, personalisation is the name of the game. Here, the portfolio managers work closely with the client and create a portfolio that suits the client best.

There is also a wide gap in terms of entry cost. You can start investing in Mutual Funds with as little as 500 rupees. However, with PMS, the minimum investment required is 50 lakhs. That explains the limited number of people who can invest in PMS.

Should you invest through PMS and Mutual Funds? Let’s find out.

What Are Mutual Funds?

Mutual funds are one of the most popular and commonly used investment instruments in India. The idea behind mutual funds is very simple. A mutual fund collects money from a number of different investors and holds it collectively. This money is then invested in different securities, stocks, bonds, etc., according to the mutual fund scheme.

A professional fund manager manages all of these investments on behalf of all the mutual fund holders. This is why mutual funds are considered a very good option for people who want to gain from the stock market but don’t have enough time and expertise to directly invest in stocks.

Types of Mutual Funds

There are several types of mutual funds available, and you can choose one based on your investment goals and how much risk you’re comfortable with. Here are some common types:

Equity Funds – Invest primarily in stocks
Debt Funds – Invest in bonds and fixed-income securities
Hybrid Funds – A mix of equity and debt
Index Funds – Track a specific market index like Nifty 50
Thematic Funds – Based on a particular theme like ESG or innovation
Sector Funds – Focus on a specific sector like banking or IT

What Is a Portfolio Management Service (PMS)?

A Portfolio Management Service, or PMS, is an investment option that provides custom and tailor-made investment solutions. It is built around a client’s specific investment objectives, financial situation, and risk appetite.

PMS is typically suited for high-net-worth individuals (HNIs) or institutional investors. In this setup, a portfolio manager manages the client’s investments, often with the authority to make decisions on their behalf.

Types of PMS

There are mainly two types of PMS:

Discretionary PMS – The portfolio manager makes all the investment decisions at his or her own discretion. The client does not need to approve every trade.
Non-Discretionary (Advisory) PMS – The portfolio manager advises the client on what to invest in, but the final call lies with the client.

Should You Go for One or Both of Them?

This is where things get interesting. Both MFs and PMS are guided investment tools that help you participate in the stock market. But their approach, structure, and outcomes can differ significantly.

How Mutual Funds Work

In a mutual fund, the portfolio is broad. You’ll often see a fund holding 40 to 50 stocks or more. Because of this variety, there’s usually a mutual fund scheme to match almost every risk profile and financial goal. Whether you’re a conservative investor or someone who’s comfortable taking big risks, there’s a mutual fund for you.

How PMS Works

PMS portfolios are more concentrated and curated. Typically, a PMS portfolio will hold no more than 20 to 30 stocks at any given time. This concentrated approach means each stock pick carries more weight, and the portfolio is built with a sharper focus.

What sets PMS apart is the level of customisation. The portfolio is tailored to the investor’s specific preferences, giving them more control over what goes into the portfolio compared to mutual funds. This flexibility is one reason why PMS portfolios are more likely to outperform the broader market.

However, PMS comes with fewer regulatory controls compared to mutual funds, which can make it riskier. But this same freedom is also what can potentially lead to higher returns.

The Cost Factor

PMS is significantly costlier to operate and manage. The fees are higher, and so are the taxes. While mutual funds have a relatively straightforward and lower cost structure, PMS charges can eat into your returns if the portfolio doesn’t perform well.

Transparency

There’s also a difference in transparency. Mutual fund data is publicly available, making it easy for anyone to compare schemes, check past performance, and make informed decisions. PMS, however, only discloses information to its clients. This means the general public doesn’t have access to PMS performance data, making it harder to compare one PMS product with another.

The Entry Barrier

Let’s not forget the biggest practical difference — the minimum investment. With PMS requiring a minimum of ₹50 lakhs, it remains out of reach for the vast majority of investors in India. Mutual funds, with their ₹500 SIP option, are accessible to almost everyone.

PMS vs. Mutual Funds: A Quick Comparison

Parameter	PMS	Mutual Fund
Function	Offers custom, tailor-made investment solutions based on individual client needs	Pools money from multiple investors and invests in a diversified portfolio
Suitability	Best suited for HNIs and institutional investors	Suitable for all types of investors
Risk	Considerably higher risk due to concentrated portfolios and fewer regulations	Risk varies from low to high depending on the scheme
Cost	Higher fees and tax implications	Relatively lower costs
Investment Horizon	More suitable for long-term investing	Works for both short-term and long-term goals
Transparency	Information shared only with clients	All data is publicly available
Minimum Investment	₹50 lakhs	As low as ₹500

Should You Invest in Both?

The honest answer? It depends.

It depends on three things:

Your investment corpus – How much money do you have to invest?
Your risk appetite – How much risk can you handle without losing sleep?
Your financial goals – What are you trying to achieve, and in what time frame?

When Mutual Funds Make More Sense

If you have a smaller corpus and don’t want to deal with complex tax compliance, mutual funds are the better option. They’re simple, transparent, well-regulated, and accessible to everyone.

When PMS Makes More Sense

If your investable corpus runs into six or seven figures (₹50 lakhs and above), and you want a personalised portfolio that aligns closely with your specific goals and risk profile, PMS could be worth exploring.

Can You Invest in Both?

Absolutely. And in many cases, this can be a smart strategy.

Let’s say you have ₹1 crore to invest. You could allocate a portion to one PMS scheme and spread the rest across multiple mutual fund schemes. By doing this, you get the best of both worlds — the customisation and potential outperformance of PMS, along with the diversification and stability of mutual funds.

This combined approach can help you maximise your chances of generating profits from both these investment avenues.

Final Thoughts

Investing in the stock market is a good idea, but at the same time, it is also full of risks. It is very important to know what you are getting into, regardless of whether you choose MFs, PMS, or a combination of both.

Both MFs and PMS have their own advantages and disadvantages. Mutual Funds are easy, require low barriers, and are transparent. On the other hand, PMS is customised, flexible, and can give high returns, but at a high cost and risk.

Before you make any decision, take your time to know what your investment goals are and what your risk appetite is. And most importantly, take the help of a qualified investment advisor before you put your hard-earned money into a PMS or a Mutual Fund.

The best investment choice is not about which is better, but which is better for you.

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Should You Invest in PMS as Well as Mutual Funds?