Investing in PMS Fund: 1 Month Performance & Fund Details

Recently, I posted a video about investing in a Portfolio Management Service (PMS) fund, which received a lot of attention and queries. Many viewers were curious about the details of the fund, so I decided to write this blog to explain

1. Why I chose Wright Research PMS
2. My criteria for selection
3. How the fund has been performing so far (just 20 days in it as of now)

Why I Chose Wright Research PMS

When searching for the right PMS fund, I had three main criteria:

1. Quant-Based Approach: I believe technology and data-driven strategies are the future of investing. A fund leveraging these tools stands a better chance of outperforming traditional methods.
2. Medium-Sized, Multi Cap Fund: I wanted an agile fund (not too small or large) that is not limited to any single sector or Cap Size. Hence I looked for AUM between 100-1000cr & Multi Cap Fund.
3. Good Past Performance and Credible Fund Managers: Unlike Mutual Funds, PMS is largely driven by its Fund Manager. Their outlook, vision & competence plays a critical role in PMS performance. So, I looked for PMS funds with good track record of at least 3 years & a fund manager with distinguished record.

Wright Research ticked all these boxes. Despite being relatively new (their PMS launched in August 2023), their quant focussed Smallcase offerings have consistently been top-rated over the past 4 years. Their transition into PMS funds seemed natural, leveraging their expertise and proven methodologies.

What Worked in Favor of Right Research

1. Performance: Wright Research has been among top performing PMS since their inception 16 months ago. They have delivered enviable returns in bullish market and have been fairly conservative during the bearish cycles.
2. Transparency: Unlike other PMS funds I evaluated, they provided comprehensive data during the decision-making process. This helped me build a lot of confidence in their data driven strategies.
3. Risk Profiling: During all our conversations, they emphasised on their focus on managing risk. Their numbers are not stellar in bearish cycles, but but still high enough from benchmark for me to go ahead with them.
4. Rapid Growth: They started 2024 with ₹60 crore in AUM and closed the year at nearly ₹400 crore. While growth is no performance indicator, it reflects their ability to confidence in their strategies to attract & retain investors.
5. Impressive Fund Manager: Sonam Srivastava, the fund manager, has an impressive track record.
6. Ease of Onboarding: The onboarding process with Right Research was quick and hassle-free, completed within two days. In contrast, other PMS funds I considered seemed reluctant to even acquire new customers and had slow processes with minimal data sharing.
7. The Startup of PMS: With their focus on technology & aggressive growth, led by a young & talented manager, betting on Wright Research felt like investing in a promising startup. So I went ahead with them.

Performance Update

It’s only been 15-20 days since I started, so it’s too early to draw conclusions. Here’s a snapshot of the current performance:

• Factor Fund: Benchmark at -2.84%; my portfolio at -2.28%.
• Alpha Fund: Benchmark at -2.84%; my portfolio at -3.17%.

Due to current bearish market conditions, the team is deploying funds gradually over 1-2 months. Of the ₹50 lakh I invested, ₹22 lakh is in debt funds for now. This phased approach aligns with their risk mitigation strategy.

Why PMS Over Mutual Funds: My Expectations

Interestingly, the decision to finalise PMS came from the expectation vs performance of our MF portfolio. Our family has a mutual fund portfolio of around 30 funds managed by a financial advisor. I noticed, that out of these 30, 10 MF (33%)  are performing mediocrely (they are not even in top 10 of their respective category). But we are still pretty content with the kind of returns we are getting. Our advisor set long term expectation of 14-16% over a period of 5-10 years. And we are at 20%. So why complain! Plus, we come from a background of investing only in FDs. For us, this is a major jump.

This is how my expectations from equity markets look like

1. Sensex or Nifty Index should deliver around 12-14% on next 10 years or so.
2. MF should do Index +2-3%, that is 14-16%.
3. PMS should do MF +3-4%, that is, 18-20% (post tax, post fee)

Anything above this is bonus. In worst case, I believe I might end up with FD like returns, which I am ok with.

Final Thoughts

Investing in a PMS fund requires a mix of calculated decisions and gut instinct. While other PMS funds had better historical returns, I chose Wright Research for their quant-focused approach, transparency & growth potential. For me, this is a 3-5 year journey, and I’m optimistic about the outcome. If you’re considering PMS investments, assess your financial goals, risk appetite, and expectations. And remember, this is a long term game. Have questions or want to share your experiences? Drop a comment below.

Thank you for reading, and happy investing!