Portfolio Management Services (PMS) are emerging as the fastest-growing investment options in India. Due to existing SEBI regulations & increasing interest from High Net Worth Individuals (HNIs) & Non-Resident Indians (NRIs), PMS has emerged as a significant alternative to mutual funds and direct equity.
But, is it better to go with Active PMS or Passive PMS? The answer relies on your objectives, willingness to take risks, and level of endurance. In this blog, you will explore Active PMS and Passive PMS, both with examples.
What are Active PMS and Passive PMS?
Active PMS in India: The portfolio manager makes active decisions with sectors, purchasing undervalued stocks, realising profits, & timing entries and exits. The objective is to outperform the benchmark.
Passive PMS in India: In this approach, the manager replicates a benchmark, such as the Nifty 50 or Sensex. The aim is not to surpass the market but to imitate it.
SEBI Rules and Minimum Investment Requirements
- Every PMS provider is required to register with SEBI.
- PMS Investment requires a minimum amount of 50 lakh
- PMS investors have direct ownership of the securities within their accounts in contrast to mutual funds.
PMS Performance Analysis
Recent results demonstrate the differences between active and Passive PMS:
- In June 2025, mid-cap PMS delivered 4.53% and small & mid-cap PMS returned 3.77%, both
- Beating benchmarks like BSE 500 TRI and Nifty 50 TRI.
- However, over the past five years, SPIVA India reveals that more than 60% of active large-cap funds underperformed their benchmarks.
Example: If an investor opted for a passive Nifty 50 PMS from 2019 to 2024, they would have surpassed numerous active large-cap PMS alternatives, as most active managers found it difficult to outperform the index.
Which PMS Strategy Yields Superior Returns in India?
Recent results demonstrate the differences between active and Passive PMS:
- In June 2025, mid-cap PMS delivered 4.53% and small & mid-cap PMS returned 3.77%, both
- Beating benchmarks like BSE 500 TRI and Nifty 50 TRI.
- However, over the past five years, SPIVA India reveals that more than 60% of active large-cap funds underperformed their benchmarks.
Example: If an investor opted for a passive Nifty 50 PMS from 2019 to 2024, they would have surpassed numerous active large-cap PMS alternatives, as most active managers found it difficult to outperform the index.
PMS is designed for HNIs and NRIs
- Ownership of stocks directly.
- Tailoring to align with individual objectives.
- Open taxation in relation to collective funds.
A non-resident Indian investing via PMS receives more than just exposure to the index. They can personalise allocations, for example, 40% in active mid-cap PMS & 60% in passive Nifty 50 PMS.
Conclusion
There isn’t one definitive winner in the Active vs Passive PMS discussion.
- Active PMS is suitable for investors seeking higher returns on investments & ready to accept the associated risks.
- Passive PMS is optimal for individuals who favour consistency, reduced costs, and performance tied to benchmarks.
- In 2025, numerous HNIs and NRIs will benefit from a blend of both approaches, combining growth and stability.
At Equentis Investech, we make PMS choices easier. We aim to assist investors in comprehending performance metrics, tax regulations, and market risks, enabling them to make informed decisions for lasting wealth.
