Analyzing PMS returns in India is far more complex than simply looking at one performance number. There is a lot happening beneath the surface. 

Differences in strategy design, levels of risk exposure, portfolio concentration, and even how actively a manager participates in the market all play a role. 

Because of this, surface-level comparisons often fail to tell the full story.

Many people follow the headlines to analyze PMS returns in India before investing. But headline performance numbers can be especially misleading. On their own, they rarely show what really matters. 

So, what really does matter? 

Let’s find out in this article.

Start with understanding what PMS returns in India actually represents

PMS Returns in India refer to the performance delivered by a portfolio that is professionally managed on behalf of investors by an expert fund manager.

Returns are typically expressed as:

  • Absolute returns (CAGR or annualised %),

  • Time-horizon based (1, 3, 5-year returns), and

  • Risk-adjusted returns that factor in volatility.

Examining these over multiple periods gives a perspective on both short-term performance and long-term consistency.

Compare returns with relevant benchmarks

Benchmarking your PMS returns is important. Returns should never be looked at in isolation. Instead, they need to be compared with the right market indices, such as the NIFTY or Sensex total return indices, depending on the PMS’s investment style and mandate.

While doing this analysis, it is also important to look beyond bullish phases. Investors should closely observe how the PMS behaves during market downturns as well. 

Evaluate risk-adjusted returns

Looking at absolute returns alone can be misleading. Risk-adjusted metrics show how efficiently a PMS generates returns.

Therefore, for a risk-adjusted evaluation, track these key indicators:

  • Return earned per unit of risk taken, i.e., Sharpe Ratio
  • Consistency of outperformance relative to a benchmark, which is your information ratio
  • And volatility in portfolio returns, via standard deviation. 

A PMS delivering slightly lower returns with better risk-adjusted metrics may be more suitable than a high-return strategy with excessive volatility. 

Platforms that present these metrics in a clear and standard way, like PMS AIF WORLD, make comparisons much simpler. They help investors easily evaluate different strategies on the same basis and take more confident, informed decisions.

Check for qualitative factors

Performance metrics alone cannot capture the full picture.

Portfolio Manager Track Record

The experience and decision-making discipline of the portfolio manager play a significant role in outcomes. Long-term consistency usually shows that a manager knows how to adjust across different market cycles, instead of just chasing short-term trends.

Clarity of Investment Approach

A PMS should be clear about how it invests. Whether a PMS follows a value-oriented, growth-driven, thematic, or blended strategy, the philosophy should be clearly articulated and consistently applied. Frequent changes in style can be a red flag. They often suggest that the decisions are rather reactive than formed following a well-defined process.

Disclosure & transparency

Regular updates and transparent reports make a big difference, enabling investors to see where the portfolio is positioned and what is driving performance. To make analysis easier, investors can use platforms like PMS AIF WORLD to get standardized PMS strategy data.

Evaluate consistency across market cycles.

Markets are cyclical, and PMS strategies tend to perform differently across phases. Analysing returns across multiple time horizons, such as one-year, three-year, and five-year periods, helps identify consistency.

The best PMS in India are typically not those that top return tables occasionally, but those that demonstrate stable, risk-adjusted performance through both rising and falling markets. 

Longevity of performance often matters more than short-term rankings.

Do risk management and drawdown analysis

Managing risk well is a key part of a strong PMS strategy.

Key indicators to monitor include:

  • Maximum drawdown, which shows the largest decline from peak to trough

  • Volatility, reflecting fluctuations in returns over time

Strategies that manage downside risk effectively and recover faster from corrections tend to be more resilient for long-term investors.

Use data platforms for better comparability.

With a large number of SEBI-registered PMS strategies available, comparing them can be overwhelming for investors. Each strategy has its own approach, risk profile, and performance history, making surface-level comparisons unreliable.

Platforms like PMS AIF WORLD simplify this process by providing standardized performance metrics, rankings, and easy-to-use filters based on factors such as risk-adjusted returns, strategy type, and market exposure. These features help investors quickly find strategies that match their goals and risk level.

Wrapping Up

Investing in a PMS in India? Don’t just focus on past returns. 

A proper evaluation considers risk-adjusted performance, consistency over time, and qualitative aspects like the strategy and the fund manager’s expertise. Transparency in reporting is also key.

Platforms like PMS AIF WORLD provide useful tools, rankings, and insights to help investors compare and select from the Best PMS in India, making the decision process much easier and more informed.