PMS vs Mutual Funds

22 Dec 2025

By: BlinkX Research Team

The difference between Portfolio Management Services vs Mutual Funds is that PMS typically involves personalised portfolio strategies managed by dedicated professionals. Whereas mutual funds operate as pooled investment vehicles managed by asset management companies. Investors often explore various investment options to grow their wealth effectively. Two commonly considered options for investments are Portfolio Management Services (PMS) and Mutual funds.

These investments represent two distinct approaches to professional fund management. One common consideration for individuals seeking expert guidance in their investment journey is PMS vs mutual funds which option is appropriate for them. This article explains the key difference between PMS and mutual funds in detail.

Difference between PMS and Mutual Funds

Understanding the PMS and mutual fund difference can help investors make informed choices. The table below highlights how these two investment options vary across several important aspects.

Points	PMS	Mutual Fund
Meaning	PMS refers to professionally managed investment portfolios offered to qualified clients. Portfolio managers create customised investment strategies based on individual client requirements.	Mutual funds are pooled investment vehicles managed by asset management companies. Fund managers oversee these portfolios on behalf of multiple investors who contribute to the scheme.
Types	PMS offerings generally include three main categories. These are discretionary PMS, non-discretionary PMS, and advisory PMS. Each type offers different levels of investor involvement in decision-making.	Mutual funds can be classified based on various parameters. These include open-ended and closed-ended funds based on structure. They also include equity, debt, and hybrid categories based on asset allocation.
Regulations	PMS operates under regulatory oversight by SEBI. The regulatory framework ensures that service providers follow established guidelines for investor protection.	Mutual funds face stringent regulations by SEBI. The regulatory structure is designed to safeguard retail investor interests through comprehensive compliance requirements.
Minimum Investment Requirement	SEBI guidelines specify that the minimum investment amount for PMS is ₹50 lakhs. This threshold makes PMS accessible primarily to high-net-worth individuals.	Mutual funds offer flexible entry points for investors. The minimum investment can start from ₹250 through systematic investment plans (SIPs). Lumpsum investments may require ₹5,000 to ₹30,000 or more, depending on the scheme.
Fee Structure	PMS fees typically comprise fixed fees, performance-based fees, or a combination of both. The fee arrangement varies based on the service provider and the type of PMS selected.	Mutual fund costs include expense ratios, which usually range from 0.5% to 2.5%. Additional charges may include exit loads and transaction fees, depending on the scheme.
Investment Control	Discretionary PMS leaves the complete decision of investment upon portfolio manager. Whereas non-discretionary PMS allows investors to approve or reject the recommended trades before they are implemented.	In mutual funds, there is no control over individual trade by investors themselves, as trading and its allocations in a portfolio are maintained by the mutual fund manager along with their team.
Asset Class Composition	PMS portfolios can include various asset classes. These typically consist of equity stocks, bonds, debt instruments, and other securities as per the investment strategy.	Mutual funds invest across multiple asset classes. The composition generally includes equity shares, bonds, debt securities, and sometimes gold or other approved instruments.
Potential Returns	Returns from PMS depend on market conditions and the portfolio manager's performance. Returns cannot be predicted with certainty.	Mutual fund returns are subject to market movements and fund performance. Future returns remain unpredictable and vary by scheme.
Risk Involved	PMS investments may carry market risk similar to other equity-linked products. The concentrated nature of most PMS portfolios can result in higher risk compared to diversified mutual funds.	Mutual Funds involve market risk inherent to their underlying investments. However, most schemes maintain well-diversified portfolios, which can help reduce overall risk compared to concentrated PMS portfolios.
Transparency	PMS offers high transparency levels to investors. Detailed information about portfolio holdings and securities allocation is provided regularly. Investors can often request changes to their portfolio composition based on their preferences.	Mutual funds provide periodic reports on portfolio composition and asset allocation. Investors receive monthly or quarterly updates. However, individual investors cannot directly choose or modify the securities held within the fund.
Suitable For	PMS is generally suitable for high-net-worth individuals who can meet the minimum investment threshold. It appeals to investors seeking personalised portfolio strategies and direct involvement in investment decisions. Those comfortable with concentrated portfolios and higher risk levels may find PMS appropriate.	Mutual funds can be suitable for retail investors across various income levels. They appeal to those seeking diversified exposure to markets with lower entry barriers. Investors who prefer professionally managed portfolios without extensive personal involvement typically find mutual funds appropriate.

Table of Content

Difference between PMS and Mutual Funds
Should You Invest in PMS or Mutual Funds?
Conclusion

Should You Invest in PMS or Mutual Funds?

The choice between portfolio management services vs mutual funds depends on individual financial circumstances and investment goals. Both options serve different investor segments and offer distinct advantages.

PMS could be suitable for high-net-worth individuals seeking customised investment solutions. It usually offers more direct involvement in portfolio decisions. The service is designed for those who can meet the minimum investment requirement of ₹50 lakhs. PMS portfolios typically hold 20-30 stocks, providing a concentrated approach. This concentration can potentially lead to higher returns, though it also involves greater risk.
Mutual funds are generally accessible to everyday investors across various income levels. They usually provide diversification benefits and ease of entry through flexible investment amounts. The strict regulatory oversight makes them relatively lower risk compared to PMS. Mutual fund schemes often hold 40-50 or more stocks, offering broader market exposure.
Investment corpus plays a significant role in this decision. Investors with smaller capital may find mutual funds more practical. Whereas people with substantial wealth might consider PMS for its customisation features.
Risk appetite is another crucial factor to consider. Conservative investors typically prefer the diversified approach of mutual funds. Whereas people comfortable with concentrated portfolios and higher risk might explore PMS options.
Financial goals and preferences matter significantly. Mutual funds could suit investors who prefer guided investment without extensive involvement. Whereas PMS may appeal to those who desire more control over their portfolio composition and are willing to engage actively in the investment process.
Tax compliance and administration requirements also differ between the two. Mutual funds involve simpler tax reporting for most investors. Whereas PMS may require more detailed tax documentation due to the nature of individual securities transactions.

Disclaimer - All investments are subject to market risks, economic conditions, regulatory changes, and other external factors. Returns are not guaranteed and may vary based on market performance and investment tenure. Investors should assess their risk tolerance and financial objectives, conduct their own research, and consult a qualified financial advisor before making any investment decisions.

Conclusion

The decision between PMS and mutual funds depends usually on individual financial capacity, risk tolerance, and investment objectives. Both investment avenues offer professional management and exposure to market opportunities. Mutual funds provide accessibility and diversification for investors across different financial backgrounds. Whereas PMS offers customisation and concentrated strategies for high-net-worth individuals. People interested in exploring market investments can utilise a modern trading app to track portfolio performance. A reliable stock trading app can also help investors monitor market movements and make informed decisions.

Press Release

Unlimited Trading starting at just ₹249 ₹0

Open Trading Account

+91

*By signing up you agree to our terms & conditions