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Money managers of the wealthy sweat it out; 90% PMS failed to deliver even 1% return in April

PMSes cater to wealthy investors with portfolio sizes exceeding Rs 25 lakh.

Updated: May 13, 2019, 01.32 PM IST
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PMS managers attributed the poor performance to a combination of global as well as domestic factors, which continued to weigh on domestic equities.
NEW DELHI: Majority of alpha chasers on Dalal Street again depressed investors in April.

Benchmark equity indices hit fresh record highs during the month, and data suggests 206 of 230 portfolio managers registered with Sebi failed to beat Sensex’s 0.93 per cent rise during the month.

PMSes cater to wealthy investors with portfolio sizes exceeding Rs 25 lakh, and charge higher fees compared with mutual funds for their services.

PMS managers attributed the poor performance to a combination of global as well as domestic factors, which continued to weigh on domestic equities. “Market sentiments were adverse due to the prevailing global macro scenario, and tight liquidity conditions in the Indian market. Money is chasing select largecaps, as they are perceived to be safer compared with others despite premium valuation,” said Mayur Shah, PMS Fund Manager at Anand Rathi Advisors.

On the global front, escalating trade tensions between the US and China and a spike in crude oil prices (nearly 40 per cent jump from December 2018 lows) impacted market sentiment, whereas uncertainty over election outcome acted as a key short-term risk back home.

Data showed only PMSes run by Angel Broking, LIC Mutual Fund Asset Management, UTI Asset Management, IDBI Capital Market Services, Indiabulls AMC, Escorts, Banyan Tree Advisors and Sanctum Wealth managed to move in line with the broader market or outpace the benchmark indices in April.

PMS Table 1 (1)

A PMS managed by Landmark Capital Advisors delivered 15.34 per cent return during month. Indiareit Fund Advisors managed 11.92 per cent and LIC Mutual Fund’s PMS logged 8.52 per cent.

Among newly-launched PMSes, Saurabh Mukherjea’s Marcellus Investment Managers delivered a flat 0.20 per cent return, while a PMS run by Equinomics Research and Advisory witnessed over 2 per cent fall.

“It is a great time to enter PMS. A slew of global as well domestic factors are impacting market right now ahead of the election outcome. Whatever the political outcome, the market may not crash in a big way as most major economic reform measures have already been executed,” said G Chokkalingam, Founder, Equinomics Research and Advisory. Chokkalingam launched his PMS only months back.

He believes the risk is much lesser in the midcap space now compared with that in largecaps. Most of the index stocks are trading at stretched valuations.

“Quality smallcaps and midcaps have a fair chance of making an extraordinary comeback, outperforming the benchmark indices by big margins during the rest of 2019 if political stability returns post election. PMSes focused on midcaps can be the right choice for long term investors,” he said.

PMS Table 2 (1)

The BSE Sensex has advanced 11 per cent since January 2018, whereas the BSE Smallcap and Midcap indices are down up to 27 per cent.

PMSes run by Kochi-based investor Porinju Veliyath-led Equity Intelligence and Kolkata-based Basant Maheshwari-led Basant Maheshwari Wealth Advisors witnessed 5.99 per cent and 0.73 per cent drop, respectively, during the month.

Other known PMSes such as the ones run by Anand Rathi Advisors, Tulsian PMS, SMC Investment and Advisors, Old Bridge Capital Management, IndiaNivesh Investment Managers, Geojit Financial Services, Prabhudas Lilladher and Reliance Capital Asset Management all dipped between 1 per cent and 5 per cent.

PMS Table 3

“A major part of our portfolio is built with stocks that offer better growth prospects and relatively low valuations. However, this segment is not witnessing any inflow right now, which will start attracting investment once the sentiment and liquidity scenario improves. Global economies are showing slowdown and the impact of the same is also visible domestically. In our fund, we have a long-term strategy where we have investments in long-term value stories and we believe value unlocking is going to happen over a three-year period,” said Shah of Anand Rathi Advisors.

PMSes of other established money managers such as Motilal Oswal AMC and Enam AMC slipped up to 1.15 per cent in April, while the ones of Quantum and ASK gained marginally by 0.19 per cent and 0.072 per cent.

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