After a healthy performance in April, the month of May continued to witness an even better show from PMSes. As companies reported sound numbers for the previous quarter and with falling inflation, the equity market had a good run during the month, with key indices rallying smartly. The frontline bluechip index, Nifty, delivered 2.87% during the month, while the broader market BSE 500 gave 3.78% return. FIIs made net purchases of Rs 27,856 crore in May, the highest in recent months, propelling the market to higher levels.

The May month saw as many as 275 of the 331 (over 83%) PMSes deliver higher returns than the Nifty 50 TRI. As many as 217 schemes (nearly two in three) outperformed the BSE 500 TRI in May. On average, PMSes gave 4.98% returns in May, much higher than the Nifty and BSE 500. Many styles prospered during the month and put up a sterling show.

Top 10 PMS Investment Approaches of May 2023

The following are the top 10 funds from the 331 PMSes tracked and analyzed by PMS Bazaar.

As with the previous month, every one of the top 10 PMSes delivered double-digit returns during May. Multicaps dominated the list with six of such Investment Approaches finding a place in the top 10, followed by small caps.

The top 10 funds delivered 3x to 4x the returns of the Nifty 50 TRI and BSE 500 TRI.

Topping the overall chart was the Value Magno investment approach, a flexi cap fund, of Shepherd’s Hill Financial Advisors, with 14.04% return in May. This Investment Approach holds 15-20 stocks and focuses on companies with intrinsic values that are not priced correctly by the markets.

Equirus Wealth’s Long Horizon Fund, which invests in small caps, was next on the list with 13.2% in May.

The Platinum investment approach of Valuequest Investment Advisors was third and gave 13.09% returns during the month. This multi-cap strategy invests in a concentrated portfolio of 8-12 stocks.

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The performance of the top 10 PMSes and their comparison with Nifty and BSE 500 for May, are given below.

Category-wise performance of PMS players

The chart below depicts the performance of the PMS schemes across categories in May. Midcaps were the top segment in the month, with a healthy 6.19% average return. Small caps followed closely with 6.06%. Small & Midcap (5.88%) and Multicap (5.08%) also had a good run during the month. Other strategies managed a little over 4% during May.

Small caps

May was a solid month for small-cap PMSes, and they delivered a robust 6.06% return during May. 

Of the 20 schemes, 14 delivered more than the BSE 500 TRI and Nifty 50 TRI. 11 of the 20 approaches gave a higher return relative to the average of 6.06%.

Equirus Wealth’s Long Horizon Fund was the chart-topper with 13.2% return during May.

Aurum Small Cap Opportunities Investment Approach of Nine Rivers Capital came second with 12.9% returns in the month. It seeks to buy businesses that have the potential for multi-year structural growth, are run by good management teams, and are available at a significant discount to their intrinsic value.

Third on the list with 12.51% returns was Vrddhi from iThought  Financial Consulting. The fund looks to invest in emerging giants in the mid, small, and micro-cap segments.

The performance of the category with respect to the BSE 500 TRI and Nifty 50 TRI is depicted in the graph below.

Small & Midcaps

The small and midcaps segment had a fairly good run in the month. This category delivered 5.88% returns on average. 14 of these 31 schemes outperformed the 5.88% average return.

The Emerging India Portfolio of Phillip Capital came out on top with 10.61% returns in May.

Roha Asset Managers’ Emerging Champions came a close second with 10.25% returns during the month. The fund invests in mid and small-cap companies that are set to benefit from India’s multi-year structural growth theme.

Silverarch’s mid & small cap equity fund came third with 9.17%.

Midcap

Midcap schemes had the best period in months. The strategy delivered 6.19% on average in May. As many as 22 investment approaches beat the Nifty 50 TRI, while 20 did better than the BSE 500 TRI. 13 of 23 schemes beat the average returns of the midcap segment (at 6.19%).

The Gems approach of Emkay Asset Managers, which invests in 20 equi-weighted midcap stocks that have an economic moat and dominant sector position, came first with 9.73% returns during the month.

Nippon India’s Emerging India approach, which invests in high-growth emerging companies that are pioneers or potential to become leaders later, was second with 8.8% returns in May.

The Midcap Portfolio of Renaissance was third on the list, with 8.32% returns during the month.

The chart below shows how the midcap strategy fared against the Nifty 50 TRI and BSE 500 TRI in May.

Large and Midcap

The 13 large and midcap funds delivered 4.33% on average in May. All 13 schemes gave positive returns during the month.

On top of the chart was the LEAD approach of Emkay Investment Managers, with 6.58% returns. Emkay L.E.A.D. (Leadership. Excellence. Ambition. Discipline.) invests in high-growth large and mid-cap high-growth companies with a leadership trait in their sector along with a wide economic moat, quality management, and reasonable valuations.

The Alpha fund of Green Lantern Capital was a close second with 6.41% return during May.

The All Weather Portfolio of Torus Oro Portfolio Management, which invests across stocks, bonds, commodities, and gold, was third with 5.86% return.

Large cap

The Large cap category experienced one of its better months this May. The category delivered 4.19% on an average. Of the 25 PMSes tracked, 19 beat the Nifty 50 TRI, though only 13 did better than the BSE 500 TRI.

Tulsian PMS was the top scheme, the only fund with double-digit returns in the category, delivering a 10.41% return.

Accuracap’s Alpha10, which invests in 10-20 large-cap stocks, was a distant second with 6.04% returns.

Motilal Oswal’s Value Migration approach stood third with 5.99% returns during the month.

In the chart below, the performance of the large-cap category average against the returns of the Nifty 50 TRI and BSE 500 TRI in May is depicted.

Multi-caps

Multi-cap PMSes had a reasonably sound month, delivering 5.08% on average. As many as 110 of the 159 PMSes (nearly 7 in 10) outperformed the BSE 500 TRI’s return of 3.78% in May. When the Nifty TRI is taken as a benchmark, 144 (more than 9 in 10) outperformed the bluechip index.

Valuequest Investment Advisors’ Platinum approach came on top with 13.09% return in May.

The Growth investing approach from the same Valuequest Investment Advisors delivered 12.48% return and was second on the list.

The Multicap Portfolio of Incred asset management was a close third in the performance chart, with 12.4% delivered during the month.

Thematic 

The thematic category did not do as well as some of the other categories. It notched a 4.18% return on average during the month.

The Healthcare Portfolio of Incred asset management, which mainly invests in pharmaceuticals, hospitals, diagnostic chains, and insurance firms, was the topper with 6.95% return in May.

Rise of Invesco, which focuses on firms that benefit from an increase in consumer discretionary spending, came second with 6.24% return.

Green Portfolio’s Dividend Yield Investment Approach came third with 6.07% return in May.

Overall Outlook:

The markets appear buoyant over the past few months. The RBI and U.S. Federal Reserve have paused interest rate hikes, given that domestic and U.S. inflation is coming under control. Hence, the outlook is generally positive on the rate front. Technology stocks in the US have rallied well.

With domestic banks registering record profits last fiscal year, NPA woes abating (CRISIL data), and broad-based infrastructure spending set to kick in the coming quarters from both the government and private sector, India’s GDP growth is likely to be healthy.

With FII flows returning strongly (majorly in banking and financial services) and no major negative challenge on the horizon, the outlook for equity markets remains optimistic for the foreseeable future.