All you need to know about Multi-Asset PMS

Diversify with Multi-Asset PMS. A PMS that invests in a mix of asset classes including stocks, bonds, gold, and more, all managed by professional managers. They adjust the portfolio to weather market storms and aim for steady returns.

03 Jul 2024
All you need to know about Multi-Asset PMS

Multi-asset portfolio management services (PMS), as the name suggests, invest in a diversified mix of asset classes including equity, bonds, gold etc, to balance risk and return. This approach aims to create a portfolio that can withstand market fluctuations and deliver consistent returns over time. For example, debt assets may provide a good return when the equity market is low. Sometimes when both of these asset classes are on low, gold tends to do well. 

Professional fund managers tailor the portfolio allocations-based market conditions, offering greater flexibility and control compared to traditional investments. To some large clients, these fund managers can tailor portfolios based on individual risk tolerance and market conditions as well.  

Gaining popularity of multi-asset PMS – While multi-asset investing has been present in the market for centuries, it started to gain popularity globally after the financial crisis in 2008. Multi-asset PMS have started getting the attention of investors just as multi-asset mutual funds have become popular. Increased investor interest in managing volatility and the recent strong performance of these funds, especially during downturns, have contributed to their growing popularity. Stricter regulations have also given investors more confidence in these PMS options.

How do multi-asset PMS generate returns? 

Multi-asset PMS generate returns by spreading investments across different asset classes, effectively diversifying the portfolio. This is one of the key benefits of multi-asset PMS. The approach helps derive risk-adjusted returns by not depending on one single asset class, providing safety. 

That is by investing in a multi-asset fund, investors can gain exposure to a mix of stocks, bonds, commodities, and other assets (REITs), without the need to research and manage individual investments. This simplifies portfolio management and allows for professional management by experienced fund managers who can adjust the allocation based on market conditions, aiming to optimise returns and manage risk.

For example, a fund with 50% equity, 30% fixed income, and 20% gold can still deliver a positive return even if the stock market declines, due to the stability of bonds and the potential for gold to outshine during economic uncertainty.

Benchmark for multi-asset PMS 

As per SEBI, multi-asset PMS is mandated to use the Nifty Multi-Asset Indices to benchmark the performances of these funds. These indices blend the performance of different asset classes, such as equity, debt, arbitrage, and REITs/InvITs, to reflect the performance of multi-asset portfolios.

For instance, there are two Nifty Multi-Asset Indices. One of them has Equity, Arbitrage, REITs/InvITs with 50% exposure to Nifty 500 (Equity), 40% exposure to Nifty 50 Arbitrage (Arbitrage) and 10% exposure to Nifty REITs & InvITs (REITs/InvITs) index. 

Another Nifty Multi-Asset index has 50% exposure to Nifty 500 (Equity), 20% exposure to the Nifty Medium Duration Debt index (Debt), 20% exposure to Nifty 50 Arbitrage (Arbitrage) and 10% exposure to the Nifty REITs & InvITs (REITs/InvITs) index.

The PMSes can pick and choose any one index as their multi-asset index based on their allocation. 

PMS multi-asset performance vs benchmark 


There are 16 multi-asset PMSes within the PMSBazaar universe and the average returns across time frames have outperformed the benchmark indices. 

Six-month performance 

During the 6-month performance, all 16 multi-asset PMS approaches have beaten their respective benchmark indices. Here are the top 5 performers. 


One-year performance 

Even during the one-year performance, of the 15 investment approaches, 11 of them have outperformed their benchmark. Here are the top performers. 

Two-year performance 

While the average returns of 13 multi-asset PMS approaches were 21.97%, 11 of them have beaten benchmark indices. Here are the top performers. 


Three-year top performers are as follows

Takeaway 

While multi-asset PMSes have performed and delivered better than the benchmark indices, investors should keep a few key points in mind. 

Before investing, an investor should evaluate the underlying investment strategy of the PMS (multi-asset) in order to choose the right investment approach (strategy) as per the risk appetite, investment horizon and liquidity needs.

Also, the taxation of these funds varies and depends on the asset allocation for a particular scheme. Thus, before investing, an investor should understand the positioning of investments to gauge the tax liabilities. 

That said, the main takeaway is that multi-asset PMS offers a compelling option for investors seeking a balanced approach to growing their wealth. By spreading investments across various asset classes, these funds can help reduce risk and achieve consistent returns over time. 

Recent Blogs

How to ease client onboarding in the alternative industry?

While the alternative industry has growth potential, the onboarding of clients faces a few setbacks. This blog explores the challenges and solutions.

SEBI proposes new asset classes for savvy investors

Here is a brief on the consultation paper proposed by SEBI, the market regulatory, regarding the new asset class. The story explains the features, rules, strategies and more.

How important are distributors in the PMS industry?

This blog covers the challenges faced by distributors in the PMS Industry and the possible solutions for the same.

What is the significance and the impact of compliance procedures in the PMS Industry?

This blog consolidates insights from various experts on the role and importance of compliance and operations in the PMS Industry