Large Cap stood out this month, followed by Thematic, Small & Midcap, Multicap, Large & Midcap, Midcap, and Small Cap

September 2024 proved to be a challenging month for Portfolio Management Services (PMS) strategies, with only 144 (35%) of 410 offerings tracked by PMSBazaar managing to outperform the BSE 500 TRI. However, amidst the overall struggle, large-cap PMS strategies bucked the trend, showing resilience and taking the lead in performance. Following large-cap as a category were thematic (up 1.86%), small & mid-cap (up 1.72%), and multi-cap (up 1.32%). 

Notably, the month also saw sharp volatility, with the Nifty 50 TRI gaining 2.28%, and market sectors like Metals (+8%), Utilities (+5%), and Consumer (+4%) performing well, while Telecom (-5%) and PSU Banks (-3%) lagged. Large-cap PMS strategies delivered average returns of 2.18%, making September one of the few months where large-cap stocks outshone smaller peers like midcap and smallcap strategies. This is significant, as large-cap PMS strategies are usually more conservative and concentrated within a single market capitalisation band. The performance was driven by sectoral rotations, skilled stock selection, and a focus on quality businesses.

Top 10 PMS Strategies of September 2024:

While the overall PMS performance was mixed, a few standout strategies delivered exceptional returns, beating market benchmarks by a significant margin. 

Notably, Pace Financial Investment Adviser’s Tresor SKG India Value was the numero uno with a whopping 12.02% return in September 2024. This 1-year old multi-asset offering happened to be the 2nd best overall in August 2024, when it had clocked 10% return. Thus, Tresor SKG’s dream run continues where it as a multi-asset offering has so far managed to outperform pure equity peers!

Molecule Ventures’ small-cap oriented Quant strategy emerged as number 2 with 10.28% return in September 2024. The PMS player’s investment philosophy is built on 3 factors: non-linearity, longevity and compounding.

At overall rank 3rd is Sundaram Alternate Assets’ SISOP strategy, focussing on a multi-cap approach, with 6.24% gains in September 2024. SISOP is run as a concentrated multi cap portfolio of around 15 stocks, with bets on companies with sustainable competitive advantages and reasonable valuations.

At 4th and 5th ranks were Emkay Investment Managers’ Golden Decade of Growth strategy with 6.2% and Wryght Research’s Alpha Fund with 6.04% respectively. Recall the Alpha Fund, backed by a quantitative momentum approach, held the same overall position at the end of August 2024 too.

Below are the Top 10 PMS strategies for September 2024:

These strategies delivered substantial alpha over benchmark indices like Nifty 50 TRI and BSE 500 TRI, thanks to well-timed sectoral allocations and stock selections in resilient sectors such as healthcare, technology, and financial services.

Category-wise Performance of PMS Players

Sectoral tilts do have a bearing on how the overall universe of equity PMSes perform. While Nifty50 and BSE500 were up 2% in September 2024, sectorally Metals (+8%), Utilities (+5%), Real Estate (+4%), Consumer (+4%), and Financial (+4%) were the top gainers. On the other end of the spectrum, Telecom (-5%), PSU Banks (-3%), and Technology (-2%) were key laggards MoM. 

At the same time, the buoyancy in mid caps and small caps was missing this month, as defensive bets in large caps outperformed. This does indicate that PMS portfolios that are tilted towards the more riskier segments would have not done as well. From the PMS category perspective, Large Cap stood out this month, followed by Thematic, Small & Midcap, Multicap, Large & Midcap, Midcap, and Small Cap.

The performance of the categories is depicted below:

Large Cap

September 2024 was a standout month for Large Cap PMS strategies, as they delivered an impressive average return of 2.18%, narrowly trailing the Nifty 50 TRI (2.28%) but outperforming the BSE 500 TRI (2.09%). Notably, 62.5% (15 out of 24) large-cap PMS strategies managed to beat both benchmarks, a rare feat given the sector's typically conservative nature. This month marked a significant shift, with large-cap strategies showing resilience and delivering alpha in a market environment that favoured quality and stability over speculative plays.

Following are the top performers in the large cap category:

Leading the charge was Marcellus Investment Managers’ Consistent Compounders strategy, which posted an impressive 4.50% return, reflecting its focus on high-quality businesses with strong growth trajectories. Close behind was Standard Chartered Securities' Long Term Value Compounder, delivering 4.42%, and ithought Financial Consulting's TRUBLU at 4.15%. These strategies appear to have benefitted from their focus on large, established companies with strong fundamentals, which provided stability amidst market volatility.

Thematic

The Thematic PMS strategies stood out in September 2024, with an average return of 1.86%, higher than most other categories. Although still short of the Nifty 50 TRI (2.28%), thematic strategies, by their very nature, capitalised on specific trends and sectoral plays, allowing 17 schemes to navigate the month’s volatility. With targeted investments in healthcare, technology, and financials, thematic strategies continued to attract investors looking for niche growth areas.

Following are the top performers in the thematic category:

InCred Asset Management's Healthcare Portfolio led the thematic category with a return of 5.93%, reflecting the strength of healthcare stocks, which benefitted from strong earnings and sector-specific tailwinds. Green Portfolio’s Super 30 Dynamic and Marcellus' Kings of Capital strategies followed closely with 4.81% and 4.51%, respectively, capitalizing on technology and financial themes.

Small & Mid cap

The Small & Midcap PMS strategies had a stronger month compared to the pure small-cap segment, posting an average return of 1.72% in September 2024. While this still fell short of the Nifty 50 TRI (2.28%) and BSE 500 TRI (2.09%), 18 out of 42 schemes managed to outperform the BSE 500 TRI, demonstrating the relative resilience of mid-sized companies during this period.

Following are the top performers in the small & mid cap category:

Multi cap

Multicap PMS strategies had a mixed month in September 2024, posting an average return of 1.32%, which was below both the Nifty 50 TRI (2.28%) and the BSE 500 TRI (2.09%). However, the sheer diversity of this category allowed 56 out of 175 schemes to outperform the BSE 500 TRI, highlighting the importance of flexibility in portfolio management. These strategies, which have exposure across market capitalisations, navigated the volatile market conditions better than some more focused strategies.

Following are the top performers in the multi cap category:

Sundaram Alternate Assets' SISOP strategy led the multicap category with a strong return of 6.24%, followed by Motilal Oswal’s India Growth Strategy, which posted 5.69%, and Valuequest Investment Advisors' Platinum strategy at 5.41%. These top performers benefitted from a blend of large and midcap stocks, particularly in sectors like financials, technology, and healthcare, which helped generate alpha in a volatile environment.

Large & Mid cap

The Large & Midcap PMS strategies fared relatively better than some of their smaller-cap counterparts in September 2024, posting an average return of 1.15%. However, they still underperformed both the Nifty 50 TRI (2.28%) and BSE 500 TRI (2.09%). This category, with its balanced exposure to large and midcap stocks, saw no schemes outperforming the benchmarks this month, though some notable strategies delivered decent returns.

Following are the top performers in the large & mid cap category:

The Large and Midcap Portfolio from SageOne Investment Advisors was the best-performing strategy in this category, delivering 3.02%, followed by Bonanza Portfolio Ltd’s Growth strategy at 2.73%, and Geojit Financial Services’ Freedom Portfolio, which returned 2.65%. These strategies appear to have benefitted from exposure to both defensive large caps and growth-oriented mid caps, balancing the risks and rewards of both market segments.

Mid Cap

The Midcap PMS strategies had a challenging month in September 2024, with an average return of 0.89%, falling significantly behind both the Nifty 50 TRI (2.28%) and BSE 500 TRI (2.09%). Only 5 out of 18 schemes managed to outperform the BSE 500 TRI, highlighting the difficulty midcap strategies faced amidst sectoral rotations and market volatility.

Following are the top performers in the mid cap category:

Right Horizons' Super Value strategy led the midcap category with a return of 3.65%, followed by Sundaram Alternate Assets' SELF Portfolio at 3.43%, and Marcellus Investment Managers' Rising Giants Portfolio, which posted 2.85%. These top performers appear to have focussed on quality midcap stocks with strong earnings growth potential, particularly in sectors such as healthcare, consumer goods, and financials.

Small Cap

In September 2024, Small Cap PMS strategies delivered a relatively modest performance, with an average return of 0.59%, underperforming both the Nifty 50 TRI (2.28%) and the BSE 500 TRI (2.09%). Only 4 out of 23 schemes managed to outperform these benchmarks, reflecting a challenging environment for smaller companies, which typically show more volatility during market shifts. Despite this, some small-cap strategies still stood out, driven by strategic stock selection and a focus on growth sectors.

Following are the top performers in the small cap category:

The Quant strategy from Molecule Ventures led the pack with an impressive 10.28% return, driven by focussed bets on emerging small-cap opportunities. Despite broader market headwinds, this strategy's ability to generate alpha can be attributed to its targetted approach. 

Other top performers, such as Equirus Wealth's Long Horizon Fund and Right Horizons' Super Value Aggressive, also seem to suggest that they leveraged sector-specific plays to achieve gains of 4.28% and 3.58%, respectively.

Bottom line

September 2024 was a challenging yet insightful month for PMS investors, with only 35% of PMS offerings outperforming the BSE 500 TRI. While segments like Large Cap and Multi Asset strategies showed resilience, many categories struggled to keep pace with the broader market indices like the Nifty 50 TRI (2.28%) and BSE 500 TRI (2.09%).

Looking forward, as the Nifty 50 continues to trade at 21.5x one-year forward earnings, above its historical average, markets may remain volatile but supported by strong fundamentals. Factors such as a stable political environment, GDP growth of 6-7%, and favourable macroeconomic indicators like stable currency and controlled inflation are expected to drive further market growth.

Investors can expect Large Cap and Thematic strategies to remain key areas of interest, particularly in sectors like technology, healthcare, and financials. Additionally, Multi Asset PMS strategies may continue to attract conservative investors seeking diversified portfolios that balance equity market volatility with fixed-income stability.