Most of these high-flying schemes belong to midcap, smallcap, multicap categories FY21 will go down in the history of financial markets as a year of difficulties. While markets crashed to lows at the start of the fiscal, it quickly recovered lost ground and soared like a phoenix rising from its ashes. As a result, investors who had the patience to remain invested in PMSes saw their wealth grow fast. Data collected for over 200 PMS strategies shows that 36 clocked at 100 per cent gain for FY21, with the top performers delivering blitzkrieg performance of 150 to 200 per cent. The superlative performance of PMSes, once again, debunks many myths surrounding this industry that has often been for taking risks. FY21 comprehensively proved that returns were significantly high as well for PMSes. Read on to know more.

Year in review

FY21 has been a stellar year for the markets. All the mainstream indices delivered solid returns on the back of sharper-than-expected economic and corporate earnings recovery. The Nifty was up 71 per cent, Nifty Midcap 100 rocketed 102 per cent and BSE Small Cap zoomed 115 per cent. Broad market share shifts toward organized corporates across sectors and prudent cost optimization measures catalyzed earnings growth in a year when nominal GDP is expected to decline. While towards the end of 4QFY21, a spike in COVID-19 cases in the second wave has started, an interplay of resurgence in COVID-19 cases and the pace of vaccination would decide the trajectory of economic recovery from now on.

Naturally, PMS strategies delivered solid performance in a year when broader markets did well. As many as 36 PMS funds delivered at least 100 per cent return, which means doubling of wealth in 12 months flat. Another 47 PMSes clocked between 75 to 100 per cent gains in FY21. About 100 PMS strategies gave between 50 to 75 per cent returns. Lastly, about 30 PMS funds returned with 9 to 50 per cent wealth gain for investors. Importantly, not a single PMS strategy delivered negative return.

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Notable performers

Nine Rivers Capital Aurum Small Cap Opp. was the best performing strategy of FY21. It gave 202.8 per cent return in this fiscal, beating both the small cap category average and the benchmark index by a wide margin. The strategy builds a portfolio of 12-15 high conviction small cap stocks with an investment horizon of 3-5 years on each stock.

Negen Capital Small Cap Emerging delivered a scorching return of 188.61 per cent for FY21, with its last 6-month return of 62 per cent . Coming from a relatively new outfit, the strategy derives strength from a predominantly small cap and midcap focused PMS set up. The strategy identifies value investing opportunities via special situations like demergers and spin offs.

At the 3rd slot was Valentis Rising Stars Opportunity Fund with 169.47 per cent FY21 return. The strategy practices long-term investing in cherry picked stocks mostly in the mid and small cap space with a buy-and-hold approach.

At 4th, 5th and 6th slots are strategies from Unifi Capital. Unifi Capital APJ 20 clocked 154.22 per cent this financial year, true to its aim of generating superior absolute returns with below-average risk. Unifi Capital Green Fund provided whopping 149.83 per cent return for FY21 is and is one the earliest strategies to focus on sustainable investing, a theme that has only recently picked up pace. Lastly, Unifi Capital Spin Off PMS strategy helped investor money grow 149.27 per cent in FY21.

At 7th rank is Equirus Securities Long Horizon Fund with a massive 144.22 per cent FY21 gain. The small & midcap fund aims to be early in the business discovery, thus providing investors maximum earnings growth with limited churn.

Centrum PMS Multibagger strategy was placed at 8th spot, with 136.23 per cent gain for FY21 while at 9th rank was Sage One Small & Microcap with a memorable 130.10 per cent return to investors for FY21. Completing the top-10 list was Karma Capital Advisors Long Only India Public Equity PMS strategy with 127.81 per cent return for the financial year.

Category wise

Large & Midcap - For the 4 strategies in this small basket, FY21 returns ranged between 39 to 66 per cent with the two best performers being Bonanza Growth(up 65.96 per cent)  and IDFC Asset Management Neo Equity Portfolio(up 57.05 per cent) 

Largecap - For the 19-scheme category, FY21 average gain was at a decent 57 per cent. Notable outperformers were ICICI Pru Largecap Portfolio (up 77.72 per cent) and Right Horizons India Business Leader (up 70.68 per cent). Beating a passive index this year was not definitely an easy task and all largecap portfolios were tested.

Midcap - This 27-strong scheme basket saw FY21 returns range from 55 per cent to almost 155 per cent. The category average at 96 per cent looked impressive, with outperformers being Unifi Capital APJ20 and Spin Off strategies. The Nifty Midcap 100 gave 102 per cent, making it tougher for PMSes to outperform, but quite a few managed to outshine the benchmark.

Multi asset - A hybrid category, FY21 returns were comparatively sedate here given the 30 to 58 per cent range. Lower allocation to equities hurt these funds, which follow an asset allocation model meaning 100 per cent weight to equity is almost a pipe dream for an investor betting on multi asset funds. Morningstar Active Aggressive Plus Portfolio was the standout performer in this small category with 58.25 per cent return for FY21.

Multicap - This is undoubtedly the biggest category of PMS schemes. At last count, there were 117 strategies with a multicap tag. This is not surprising given the inherent flexibility of investing across the mcap spectrum. The category average return for multicap PMSes in FY21 stood at 69 per cent vis-a-vis BSE 500's 76 per cent gain. The best performers were Karma Capital Long Only India Public Equity (up 127.81 per cent), Sage One Core (up 114.66 per cent) and Buoyant Capital Opportunities (up 112.32 per cent).

Small & Midcap - With a dozen of PMS funds under it, this growing category has been in news of late. Given that small and midcaps have hogged the limelight due to fantastic performance of stocks especially in the second half of FY21, the category average gain stands at an enviable 99.13 per cent. Joining Valentis Rising Star Opportunity and Equirus Long Horizon Fund is Care Portfolio Managers Growth Plus Value strategy (up 117.18 per cent) as the best-3 in this space.

Smallcap - Small was indeed beautiful in FY21. Lagging largecaps for a long time, smallcaps were butchered in the January 2018 correction and never really had the chance to revive much. It was the Covid rally that brought them back to focus given their superior earnings growth potential and also ultra-cheap valuations. Nine smallcap PMS funds gave 100 per cent or more in FY21. We already have talked about the best performers.

Sector - The PMS industry has a few sector funds. Given the deep expertise to run such themes, there are only a handful at present. Kotak Fintech (up 85.55 per cent) and Trivantage Capital Super Six (up 68.82 per cent) delivered superlative performance in FY21.

Thematic - There are just 2 funds in this category. For FY21, Right Horizons Alphabots India Prime was up 66.73 per cent and Anand Rathi MNC was up a modest 45.70 per cent.