PMS schemes shine in 2024 with record-setting performances; strategies navigated volatility, out-performed benchmarks, and strengthened investor confidence across the board

The year 2024 was dynamic for portfolio management services (PMS) in India. Despite evolving market conditions, PMS strategies showcased resilience and adaptability. It was a year of two halves: the first half was marked by strong performances in Indian equities and bonds, driven by robust economic growth and corporate earnings. However, the second half brought heightened volatility as growth slowed from high bases, influenced by elevated interest rates and the Reserve Bank of India’s (RBI) efforts to contain inflation and credit stress. Even amidst these challenges, PMS strategies achieved exceptional results, with all 396 tracked schemes clocking positive returns.

The performance of PMS strategies underscored their strength in active management. The highest return in 2024 was an impressive 72%, while the lowest was 2.92%. A remarkable over 86% of schemes outperformed the NIFTY 50 TRI’s 10.09% return, and 66% surpassed the S&P BSE 500 TRI’s stellar 15.81% gain. Categories such as small & mid-cap, thematic, and small-cap led the charge, with average returns of about 30%, 28%, and 27%, respectively.

This performance followed a comparatively stronger 2023, where equity markets surged with the NIFTY 50 TRI rising 21.30% and the S&P BSE 500 TRI up 26.55%. Despite the relative moderation in 2024, PMS strategies showcased consistent value creation, offering a wide range of oppor-tunities tailored to varied investor preferences. The optimism for 2025 remains intact, with India’s growth expected to pick up, supported by government spending and a recovery in consumption demand as the RBI signals a potential shift toward policy easing.

Overview of PMS performance in 2024

Portfolio management services (PMS) showcased remarkable resilience in 2024, delivering posi-tive returns across all tracked schemes. 

The year’s standout performance came from Vijay Bharadia-founded Wallfort PMS and Advisory Services’ Diversified Fund achieved an extraordinary return of 72% highlighting the potential of active portfolio management even in a volatile market. It was launched in November-2018. The small & midcap PMS strategy, driven by the Four Ps (Promoter integrity, Product Moat, Profitabil-ity metrics and Price consideration), is known to bet on 15-20 high-conviction ideas with superior risk-adjusted return characteristics.  

Amit Jeswani-led Stallion Asset Core Fund, was a close second in CY2024 with a lip-smacking return of 69.69%, after a solid 59% in CY2023 when the multi cap strategy had generated alpha of over 26% vs. BSE 500 TRI. The over six-year old Stallion Asset Core Fund strategy combines proven monopolies for stability in bear markets and emerging monopolies for growth in bull mar-kets. This blend lowers portfolio volatility while delivering consistent returns. Its consumer, phar-maceutical, and tech sectors ensure resilience and alpha creation across varying market cycles.

Finishing at number 3 in CY2024 was Rajesh Pherwani-led Valcreate Investment Managers’ IME Digital Disruption thematic strategy with 66.52%. The Valcreate IME Digital Disruption PMS focusses exclusively on listed digital platforms, capitalising on their high growth potential, strong profitability, and competitive moats. By targetting network-driven businesses, it leverages early-stage investments that stabilise over time, unlocking substantial monetisation opportunities and wealth creation as consumers become increasingly digitally native. Note, the 22-month old fund is managed by Ashi Anand.

Badjate Stock Shares’ Aggressive PMS strategy with 52.83% was ranked 4th in the top per-formers list of CY2024. The strategy, which falls in the small & mid cap category, is known to tar-get returns by investing in high-beta stocks. In CY2023, the strategy had clocked an impressive 66.32% and was placed among the top-15 performers of that year.

At number 5 was Money Grow Asset's Small Midcap PMS strategy with 52.61% gain. It finished CY2024 just a few basis points away from securing the 4th rank. The 1-year old strategy, steered by Viraj Mahadevia, focusses on high-growth potential companies in the small and mid-cap seg-ments, offering opportunities for significant long-term returns. It has thus so far generated double-digit % alpha versus Nifty50 and BSE 500 TRI in the last 12 month-period.

A significant 86% of all PMS schemes outperformed the NIFTY 50 TRI’s 10.09% return, while 66% outpaced the broader S&P BSE 500 TRI, which delivered 15.81

The table below highlights the top 10 PMS performers of 2024:

Category-wise PMS performance in 2024

Portfolio management services (PMS) categories delivered robust performances in 2024, with many outperforming key benchmarks like the NIFTY 50 TRI (10.09%) and S&P BSE 500 TRI (15.81%). Small & mid-cap strategies led with an average return in excess of 30%, driven by top performers like Wallfort PMS and Advisory Services’ Diversified Fund.

Followed closely was thematic strategies at about 28%, with the best strategy being Valcreate IME Digital Disruption. Small-cap funds were the 3rd best category at around 27% return for CY2024, with Equitree Capital Advisors’ Emerging Opportunities strategy netting an attractive 51.17% in 2024, after delivering a jaw-dropping 79.71% in CY2023. These categories capitalised on niche opportunities and high-growth sectors, showcasing their potential to generate superior  alpha.

Multi-cap and flexi-cap strategies, the most widely adopted categories, returned around 22% each, respectively, blending stability and growth. The best performing multi cap PMS strategy of 2024 was Investsavvy Portfolio Management’s Alpha Fund with 49.75% return. This 3-year old strategy in 2023 had clocked 79.61% gains. 

Mid-cap strategies followed with a solid over 19% mark, with NAFA Asset Managers’ Clean Tech Portfolio delivering a blistering 42.12% in 2024 after ending 2023 with a rollicking 54.32%. In sectoral strategies, Kotak AMC Pharma and Healthcare was the best with 33.38% vs. 2024 cat-egory average gain of 19.40%.  Larger-cap strategies, while more conservative, still delivered de-cent returns in 2024, with large-cap at over 15% (best performing strategy: Standard Chartered Securities India Long Term Value Compounder 28.71%) and large & mid-cap at nearly 17% (best performing strategy: Torus Oro All Weather Portfolio 32%). 

Among non-equity strategies, multi-asset funds achieved around 15% (best performing strategy: Moat Financial Services 27.99%), while debt funds provided steady returns in excess of 10% (best performing strategy: Maximal Capital Income Fund 19.99%), exceeding overall NIFTY 50 TRI’s gain in 2024. This highlights the diverse opportunities PMS offers across risk profiles and market conditions.

The table below capturing the category-wise returns for PMSes in 2024:

Note: ETF, Hybrid, and Arbitrage categories were excluded as they have fewer than 3 schemes each.

Outlook for 2025

India’s economy is poised for stronger growth in 2025, underpinned by a revival in domestic demand. Increased government spending and improving rural incomes are expected to fuel private consumption. The recent electoral success of the NDA alliance ensures policy stability, which could reinvigorate the private investment cycle.

Global uncertainties, however, remain a concern. Proposed tariff hikes by US President-elect Trump could disrupt emerging markets, including India. Yet, India’s reliance on its domestic economy and a relatively small contribution (~3%) to US imports positions it to manage these challenges better than many peers.

The Reserve Bank of India is anticipated to begin a gradual ratecutting cycle in early 2025, with reductions likely capped at 50-75 basis points. While the rate cuts may offer some relief, external risks may temper the RBI’s willingness to adopt an aggressive easing stance. Inflation, while ex-pected to moderate due to lower food prices and government measures, may still stay above the 4% medium-term target.

The backdrop for equities remains compelling, driven by rising economic activity, governmentled spending, and the beginning of monetary easing. For PMS investors, equities present a strong case, with robust corporate earnings likely to offset valuation concerns. Additionally, return-on-equity (ROE) metrics in Indian markets remain superior to global counterparts, highlighting the appeal of quality portfolios.

Foreign ownership in Indian equities remains at decadelow levels, offering further upside potential. For PMS strategies, the combination of improving fundamentals and selective stockpicking expertise positions investors well to capture returns in a promising but measured risk environment.

With the right strategies, 2025 offers promising opportunities for PMS investors.