In this panel discussion, different panellists from various family office groups come together to share their insights on the unique benefits that PMS offers for their group in wealth creation.

APMI conducted a panel discussion on Family Offices and PMS Industry trends bringing together five panellists from different family office groups. Their discussion was centred around the unique benefits of portfolio management services (PMSes) to family offices and how PMS providers can best serve them. They discussed on the value proposition of PMS, comparing PMS with other investment vehicles like mutual funds and AIFs. 

The panellists include: 

• Anjali Dave, Group Treasury Head, ACG World
  
• Manishankar Madal, Alembic Group 
• Sriram Mahadevan, Principal, Azim Premiji Foundation 
• Nitai Utkarsh, Hero MotoCorp 
• Benaifer Malandkar, CIO, RAAY Global Investments 
• Sushant Bhansali, Member, APMI Board (Moderator) 

One key takeaway from the discussion is the emphasis on customisation as a primary advantage of PMS for family offices. Such offices often seek bespoke investment solutions tailored to their specific requirements, which may include thematic or sector-specific investments, a level of customisation not easily achieved with standardised products like mutual funds. 

Another important aspect highlighted is the evolving role of family offices as allocators of capital. As family offices grow, they increasingly rely on external expertise rather than building large in-house investment teams. This trend makes the specialised knowledge and focused approach of PMS providers particularly appealing. PMS fund managers can leverage their expertise in specific sectors or strategies to complement the family office's internal capabilities and fill gaps in their investment approach.

The panel discussion further emphasises the value of PMS in tax planning. PMS provides family offices with greater control over tax-loss harvesting and capital gains booking compared to other vehicles like AIFs. This level of control is crucial for optimising tax efficiency, a significant consideration for family offices managing substantial wealth.

The ability of PMS to provide access to niche strategies and emerging talent is presented as a key differentiator. Family offices can engage with PMS fund managers, diversify their portfolios beyond traditional investment avenues, and capitalise on emerging opportunities.

Beyond the value proposition, the panel discussion offered insights into family offices' due diligence process when selecting PMS providers. These include: 

Track Record and Experience: While not a universal requirement, many family offices prioritise experience and a demonstrated track record across market cycles when evaluating PMS managers. This preference stems from the understanding that investment management is cyclical, and experience navigating different market conditions is valuable.

Team and Infrastructure: Family offices also scrutinise the team and infrastructure supporting the PMS manager, looking for a robust research process, experienced professionals, and a lack of key-man risk.

Regulatory Compliance and Reputation: Given their own reputational concerns, family offices place a high premium on regulatory compliance and a clean track record when considering PMS providers.

Transparency and Communication: Open and proactive communication, including detailed performance reporting, is crucial for building trust and confidence between PMS managers and family offices. Family offices prefer readily available managers to address their concerns, provide updates, and explain their investment decisions.

The panel discussion offers a comprehensive view of how PMS serves the evolving needs of family offices, positioning PMS as a flexible and customisable solution in a complex investment landscape. The discussion underscores the importance of factors beyond simple returns, highlighting the significance of expertise, transparency, and tailored solutions in meeting the unique requirements of family offices.

This was the summary of the panel discussion on Family Offices and PMS industry trends held at the APMI Conference on 4 July 2024.