Choosing Between an Equity PMS and a CAT 3 Long-Only AIF
When it comes to wealth management in India & investing in the space of Alternates, savvy investors are often caught in the dilemma of choosing between Portfolio Management Services (PMS) and Long-Only Alternative Investment Funds (AIF). Both avenues offer unique opportunities and cater to different investor needs. With the financial landscape becoming more complex and diverse, it’s critical to understand the intricacies of each option to maximize returns.
This blog aims to shed light on Equity Oriented PMSs and Long-Only CAT III AIFs, helping investors make informed decisions.
Understanding Portfolio Management Services (PMSs)
Portfolio Management Service (PMS) is a sophisticated investment vehicle that offers personalized investing into stocks, fixed incomes, and other securities. Tailored for high-net-worth individuals, PMS comes with a dedicated portfolio manager who constructs and manages a portfolio based on the client’s investment objectives and risk tolerance. With a minimum investment of 50 lakhs – this requirement being superiorly higher than mutual funds, PMS provides exclusivity, expertise, and direct ownership of securities.
Investment Strategies in PMSs & Long-Only AIFs
Investment strategies within PMSs & Long-Only AIFs are varied. Strategies can range from concentrated bets in high-conviction stocks to diversified portfolios across sectors and asset classes. Some strategies focus on value investing, while others may employ growth or a mix of both.
For instance, Abakkus Asset Managers follow an approach of ‘Growth in Value.’ The top 2 PMSs being offered by Abakkus are:
Currently, Abakkus is also open for its offering in the CAT 3 Long-Only Space.
Another example, could be of ValueQuest Investment Advisors whose Equity PMS Offerings are:
Sector-specific, thematic investments, and special situation PMSs are also common, allowing investors to capitalize on niche market segments.
For instance, Carnelian Asset Advisors have a thematic PMS & AIF, Carnelian Shift PMS, and Carnelian Shift AIF, that focuses only on the Manufacturing & IT Sector.
Likewise, Negen Capital has a Special Situations focused PMS – Negen Capital Special Situations & Technology Fund
Why Consider Long-Only AIF
Investors might consider Long-Only AIF for several reasons. These funds provide access to exclusive markets and strategies not typically available through traditional investment vehicles.
Additionally, with a higher minimum investment threshold of 1 Cr, and a cap on number of investors in the fund [999], the AUM exponential growth is limited, and fund manager is expected to deliver consistent returns.
A long only AIF could either be Open Ended or Close ended.
Comparative Analysis
PMSs and Long-Only AIFs each have their merits. The choice between the two often comes down to the investor’s financial goals, risk appetite, and the desired level of involvement in managing their assets.
| Feature | PMS | CAT III Long Only AIF |
| Pooling of Funds | No pooling; separate Demat account for each investor | Pooling of funds is a necessity |
| Minimum Investment Amount | Rs. 50 lakh | Rs. 1 crore |
| Minimum Corpus | No minimum corpus | Rs. 20 crore |
| Lock-in Period | Varies from AMC to AMC. Typically, there are no hard-lock-ins | Close-ended units have a lock-in period; varies by category |
| Tenure | No defined tenure; agreement term is binding | As defined by Fund Terms |
| Number of Investors | No specified cap | Maximum of 999 investors per scheme |
| Manager Contribution | No specific requirement | At least 5% of corpus or Rs. 10 crores, whichever is lower |
Making the Right Choice
Selecting between PMS and Long-Only AIF is a pivotal decision. The right choice aligns with your investment goals, time horizon, and risk profile. It’s about understanding the nuances of each option and how they fit into your broader financial plan.
Investors should consider several factors, including investment objectives, risk tolerance, time horizon, liquidity needs, tax considerations, and the costs associated with each investment avenue. Additionally, the track record of the fund manager, the investment philosophy, and the level of service provided are crucial considerations.
For those unsure about the right investment path, consulting with our experts at PMS AIF WORLD can be a game-changer.
We offer personalized advice that is tailored to your financial situation, helping you navigate the complex investment landscape with ease.
Do Not Simply Invest, Make Informed Decisions
WISH TO MAKE INFORMED INVESTMENTS FOR LONG TERM WEALTH CREATION
Choosing between PMS and Long-Only AIF is not just about returns; it’s about selecting an investment path that suits your journey. With the right information and expert guidance, investors can make choices that not only align with their financial goals but also bring peace of mind in their investment endeavors.
PMS AIF WORLD brings forth a plethora of advantages for investors opting for PMS. We deliver a comprehensive approach to portfolio management, coupled with transparency and control over your investments.
Over 4+ years, we have been managing 500+ UHNI & NRI families, across 1000 CR+ assets. We are very selective in our approach, and our services are marked by customization, which allows your portfolios to be designed to meet specific investment goals.
