Out of 200 PMS investment approaches within the PMS Bazaar universe that disclose their full holdings, they have allocated 1190 unique stocks across market cap - large, mid and small caps
The Nifty 50 reached a new high in August 2024, and the index has closed higher for three consecutive months. As such, since January the Nifty has been up over 16%.
In this regard, when it comes to PMS, around 280 PMS approaches outperformed the S&P BSE 500 TRI (0.96%), and 230 PMS strategies outperformed the Nifty 50 TRI (1.36%) for August.
Small & Midcap PMSes led the return chart with a 2.32% category average gain, followed by Thematic, Smallcap, Flexicap, Midcap, and Multicap. Largecap and Large & Midcap PMSes delivered uninspiring returns. Consequently, five out of seven PMS categories beat benchmarks, while Largecap and Large & Midcap categories trailed.
Overall, 54% of the total PMS approaches within the PMS Bazaar universe outperformed the Nifty 50 TRI, maintaining the winning trend seen in previous months. When benchmarked against the S&P BSE 500 TRI, nearly 66% of PMS funds clocked alpha, which is higher than the 50% hit ratio in July.
Diversified allocations across stock market capitalisations have contributed to the PMS performance. PMS Bazaar data revealed that PMS investment approaches have predominantly invested in large and small cap stocks. Out of 200 PMS investment approaches within the PMS Bazaar universe that disclose their full holdings, they have allocated 1190 unique stocks across the market cap.
That said, PMS Fund Managers have hedged against volatility with more allocation to large cap stocks like HDFC Bank, ICICI Bank, and Larsen & Toubro, yet the category-wise allocation is more skewed towards small caps. For instance, 75 PMS investment approaches have allocations to HDFC Bank, followed by ICICI Bank with 67 PMSes allocating to this stock and 59 PMSes have allocations to Larsen Toubro.
Here are the top 5 stocks that PMSes hold in the large cap category
Here are the top 5 stocks that PMSes hold in the mid cap category
Here are the top 5 stocks that PMSes hold in the small cap category
Top stock allocations
While a higher number of PMSes have greater numbers of large cap stocks in their portfolios, the allocation towards small cap segments is higher. For instance, Larsen & Toubro, a large cap stock, has the highest allocation from a PMS, followed by Vedanta, another large cap stock and Shakti Pumps, a small cap stock. So, it is clear that PMS investment approaches are taking a relatively safer bet with higher allocation towards stocks in the large cap category.
However, the allocation towards small cap stocks is still significant, indicating a balanced approach to risk management. The performance of PMS funds in August 2024 highlights the importance of diversification and the ability to identify opportunities across different market cap segments.
Takeaway
The PMS Bazaar analysis reveals that PMS funds are taking a relatively cautious approach by allocating a significant portion of their portfolios to large-cap stocks. However, they are also actively exploring smaller-cap opportunities to enhance returns.
Investors considering PMS funds should carefully evaluate their investment objectives and risk tolerance before making any decisions. As such, the stocks mentioned in this blog are not to be taken as any kind of recommendation or advice. These are for informational purposes only. Consulting with a financial advisor can provide personalised guidance.
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