When the stock market is favorable for investments and the trend has gained momentum, various entities approach investors with different investment schemes including PMS and Mutual funds.
Choosing PMS vs MF
When choosing between the two; it is important that you know what makes them different. Portfolio Management Service (PMS) is offered by investment entities and deals with equity and debt options. PMS also used to deal in real estate, unlisted shares and structured products but these were later classified as Alternative Investment Fund (AIF). Mutual Funds is a service, which pools the money of different investors to buy stocks and securities. The funds are managed by a fund manager who chooses the companies which can be ideal for investments.
Even though Portfolio Management Services offers tailor-made investments, a downward market trend can damage your invested capital. Mutual funds deal in stocks and equities too, but stock market under performance does not hurt the investor’s capital massively.
The best thing about Mutual Funds are SIPs. To invest in PMS, you should have a massive capital to buy equities in different companies. Whereas, SIPs can be as low as INR 1000 every month to get satisfactory returns. Both options have one important thing in common, i.e.charges which levied by the trading entities. These charges can be around 0.5% to 3 percent based on the frequency of the payment.
In accordance with the above comparison investing in mutual funds seems like a better investment option as it offers good returns, better capital security and easy management. To get the best result from investments in SIPs, you can refer the top 10 mutual funds for sip to invest in 2018 before investing or you can invest in Mirae Asset, SBI Blue Chip, HDFC Capital and Aditya Birla which are the best mutual fund for SIP in the market currently.