Why PMS is the Best Strategy for Active Portfolio Management in 2025

In 2024, global equities delivered impressive returns, with the MSCI World Index benefiting in double digits. The S&P 500 recorded an increase of 23.3%, while the Stoxx Europe 600 increased by about 6%. Financial markets will experience continuous instability in 2024, one one-size-fits-all investment strategy no longer works. This is where active portfolio management steps offer investment solutions run by expert fund managers who actively monitor and accommodate the portfolio.

Wealth managers in India use data-operated strategies, sector rotation, and intensive research to ensure high growth capacity and mitigate risk.

In major strategies, SEBI-regulated PMS providers reported double-digit returns, and in 2025, Portfolio Management Services in India became a favorite option for high-net-worth individuals (HNIs) and serious investors in search of personal wealth generation.

Understanding the Role of Portfolio Management Services in Wealth Management

Portfolio management services (PMS) provide personal investment management services managed by professional fund managers. Unlike mutual funds, PMS provides a strategy designed to align an investor’s financial goals, risk hunger, and time horizon. This service is particularly popular among high-net-worth individuals (HNI) seeking active portfolio management with a customized approach.

Role of PMS in Wealth Management

Analog investment strategies: Unlike mutual funds, PMS creates customized portfolios based on the specific requirements of an investor, ensuring a more strategic allocation of assets.
Active Fund Management: Professional fund managers actively monitor and adjust investments based on market conditions, and avail their expertise to maximize returns.
Risk mitigation: Through diverse asset allocation and intensive research, PMS helps investors manage risks by optimizing portfolio performance.
Direct ownership of shares: PMS investors own individual stocks in their portfolios, giving investors better control and transparency over their holdings.
High return capacity: The PMS has historically improved the way for traditional investment due to the flexibility to invest in high-development sectors and emerging opportunities.

How Professional Fund Managers Customize Portfolios?

Risk Profiling: Fund managers assess the risk tolerance of an investor so that the portfolio can align with its designated level.
Target-based allocation: Investment strategies are structured around short-term and long-term financial objectives such as wealth creation, retirement plans, or capital protection.
Regional and thematic investment: Managers identify high-affected areas (eg, IT, healthcare, infrastructure) to capitalize on market trends.
Continuous monitoring and rebellion: The portfolio is dynamically adjusted depending on market conditions, which ensures optimal performance.

Fact: SEBI data shows PMS AUM in India (excluding EPFO) surged over 40%, rising from ₹4.75 lakh crore in April 2023 to ₹6.70 lakh crore in April 2024.

By leveraging professional expertise, PMS provides a robust investment framework for achieving superior financial growth.

Why PMS Outperforms Traditional Investments

Portfolio Management Services (PMS) has obtained significant traction in search of high-net-worth individuals (HNI) and serious investors, in search of professionally managed portfolios.

This provides an individual outlook, which benefits investors from expert manual strategies to suit their financial goals and risk appetite.

With the growing market instability and investment scenario, the PMS service providers in India, such as the bonanza wealth provide a structured way of navigating complex financial markets.

Here’s why investing in PMS is a smart choice:

1. Regulatory Oversight & Transparency

The PMS works under strict rules set by the Securities and Exchange Board of India (SEBI).
This ensures that the portfolio managers follow high compliance standards, offering confidence in investors’ safety and their investment.
In addition, unlike mutual funds where investors keep their units, PMS allows complete transparency and provides direct ownership of securities.
Investors can track portfolio holdings, transactions, fees, and performance in real time, ensuring more control over their wealth and wealth management solutions.

2. Customization & Tailored Investment Strategies

One of the biggest benefits of PMS is the ability to offer tailored investment solutions.
Whether an investor prefers aggressive development, stable income, or sector-specific investments, PMS managers cure strategies based on their financial objectives and risk tolerance.
This flexibility allows investors to choose from diverse, large-cap, mid-cap or thematic portfolios, which aligns their investment with long-term wealth creation goals.

3. Professional Expertise & Active Management

The PMS portfolio is managed with deep market insight and research abilities by experienced professionals.
These fund managers do rigorous stock analysis, economic forecasts, and risk assessments to make informed decisions.
Unlike passive investment options, PMS strategies include active portfolio reinforcement to capitalize on market trends, which ensures optimal risk-doubtful returns even in unstable conditions.

4. Potential for Superior Returns

Historical data suggests that PMS has consistently outperformed traditional benchmarks and mutual funds.
According to recent studies at PMS Bazaar, equity PMS strategies delivered an average return of 18.99% over five years, compared to 15.27%from the Nifty 50 TRI and 17.38% from the BSE 500 TRI.
This ability to generate higher returns makes PMS a preferred choice for investors aiming for long-term wealth growth.

5. Diversification & Risk Management in PMS

The asset classes, regions, and market capitalization are well diverse to reduce PMS investment risks.
Fund managers can dynamically move dynamic allocation depending on the conditions of the market.
This active approach ensures a balanced risk-reward ratio, making PMS a flexible investment avenue.

With its regulatory security, transparency, Custom Portfolio Management, professional management, and capacity for better returns, PMS stands as an excellent investment option for investors seeking long-term financial development.

Whether you are in search of HNI-exclusive portfolio management or an investor seeking high returns with expert-driven strategies, PMS provides the correct mixture of flexibility and performance.

Best PMS Strategies in 2025: Growth vs. Stability

Source: PMS Bazaar

In 2025, Portfolio Management Services (PMS) is navigating the delicate balance between development and stability to meet diverse investors’ preferences. It is important to understand the nuances of these strategies to make informed investment decisions.

Growth-Oriented PMS Strategies

The purpose of these strategies is to maximize capital appreciation by investing in areas and companies ready for rapid expansion.

Major characteristics include:

Sector Focus: Emphasis on high-development industries such as technology, renewable energy and healthcare. For example, the technology sector has seen sufficient growth, which is inspired by progress in artificial intelligence and digital changes.

Market capitalization: A priority for small and mid-cap stocks, which often provide higher growth ability than large-cap counterparts.

According to Fidelity, small and mid-cap stocks have attracted attention due to the market being widespread, which offers new opportunities for investors.

Investment Horizon: Typically suited for investors with a higher risk tolerance and a long-term perspective, as these investments can exhibit higher volatility.

Stability-Focused PMS Strategies

Designed for capital preservation and consistent returns, these strategies prioritize:

Dividend-Paying Stocks:

Investing in companies with regular dividend payment history provides a stable income stream and can offer stability during a market recession.
Saddock Wealth has highlighted that dividend-paying stock with regular cash flow, especially for retirees, is an excellent choice for investors.

Blue-Chip Companies:

Focusing on established firms with strong financials and market leadership ensures lower volatility.

Diversification:

Putting assets across various sectors and asset classes to check risks associated with any single investment.

Performance Insights

In 2024, multi-cap and flexi-cap strategies, which blend elements of both growth and stability, delivered returns of approximately 22%.

Notably, Investsavvy Portfolio Management’s Alpha Fund achieved a remarkable 49.75% return, showcasing the potential of well-executed growth strategies.

Choosing the Right Strategy

Selecting between growth and stability strategies depends on individual financial goals, risk tolerance, and investment horizons:

Growth Strategy:

Ideal for investors aiming for substantial capital appreciation and willing to embrace higher risk.

Stability Strategy:

For those seeking frequent returns with minimal risk and prioritizing capital preservation.
As the financial landscape develops, the PMS managers are adjusting their approach.
Emphasizing the increase in income while maintaining valuation comfort is becoming a focal point, which leads to a change toward areas benefiting from current economic conditions.
Therefore, understanding the difference between development and stability-centered PMS strategies is necessary for 2025 to align investment options with personal financial objectives.

How PMS Adapts to Market Trends & Economic Shifts

Portfolio management services (PMS) use active management strategies to effectively respond to market trends and economic changes to maximize returns for investors. Moreover, expert fund managers keep a close watch on the market cycles and make necessary adjustments in the portfolio to manage instability and take advantage of new opportunities.

Active Portfolio Adjustments Based on Market Cycles

Fund managers in PMS actively modify the portfolio based on market cycles.
At the time of market development, they can promote investment in growth-centric sectors, while during the recession, they can give more defensive assets or sectors that are less affected by economic challenges.
This flexible strategy allows PMS to adapt to the current market conditions, which increases the chances of getting better returns.

Expert Management of Volatility

Active fund managers are better equipped to handle instability compared to passive investors.
They use techniques such as diversification, and strategic asset allocation to reduce the risks associated with ups and downs in the market.
For example, at times of increased instability, managers can increase their bets in low-beta stocks or add fewer stocks to the overall market, thus reducing the risk in the portfolio.

Advantages of Active Investing

In comparison to passive investment techniques that concentrate on mirroring market indices, active management through Portfolio Management Services (PMS) aims to exceed marketplace overall performance by taking advantage of inefficiencies and rising trends.
This approach presents extra flexibility in investment selections, allowing managers to divest from underperforming assets and redirect funds to more promising possibilities.
Active management allows for the usage of short selling, put options, and other techniques to protect towards potential losses.

Evidence Supporting Active Management

Research indicates that active management can be particularly advantageous during marketplace corrections.
A study by Hartford Funds analyzed 28 marketplace corrections during the last 34 years and observed that lively management outperformed passive techniques in 21 of those times.
This shows that active managers frequently capture more gains through market recoveries.
PMS responds to market tendencies and economic changes through active portfolio adjustments and expert volatility management.
This proactive method equips traders to correctly navigate one-of-a-kind marketplace conditions, to reap higher returns while managing risk.

Source: PMS Bazaar

How Expert Fund Managers Manage Volatility Better Than Passive Investors

Expert fund managers at the Portfolio Management Services (PMS) actively adjust their portfolios to reduce risk and improve returns during unstable market conditions.

Unlike passive investors, who rely on index-based investments, active fund managers take advantage of real-time data, predictive analytics, and strategic asset allocation to navigate market fluctuations effectively.

1. Tactical Asset Allocation & Dynamic Adjustments

Fund managers keep a close watch on macroeconomic indicators, interest rates, inflation trends, and geopolitical risks.
They regenerate portfolios according to market cycles, increasing high risk of more defensive assets during the recession.
For example, during the COVID-19 market crash, several PMS fund managers increased their stake in healthcare and technology shares, which performed well during the crisis.

2. Diversification Across Sectors & Asset Classes

Active managers spread their investment in various regions, geographies, and asset classes to reduce risk concentration.
They invest in non-related assets (eg equity, bonds, gold, and REITs) to help stabilize portfolios during periods of instability.
For example, a study analyzing emerging markets found that actively managed funds improved both the market benchmarks and passive investment styles during general market conditions.

3. Risk Management Strategies: Hedging & Derivatives

Fund managers use options, futures, and stop-loss strategies to reduce downside risks. They use a put option to protect the portfolio from significant decline.
For example, during the market slowdown in 2022, PMS managers applying hedging strategies were able to reduce losses compared to passive index funds.

4. Stock Selection & Active Research

Experienced managers make full fundamental and technical analyses before investing.
They look for undervalued stocks with strong income capacity and quickly divide by undervalued or underperforming assets.
Treynor–Black model, developed by economists Jack Treynor and Fisher Black, supports that active stock selection can produce alpha, especially in inefficient markets.
The model suggests that investors can get better returns by mixing a passively managed market portfolio with an actively managed portfolio, focused on mispriced securities, especially in inefficient markets.
This approach aligns with the idea that active management can add value to markets where securities may not have an accurate price, allowing skilled managers to take advantage of these inefficiencies for potential benefits.

5. Behavioral Risk Management

Passive investors often panic and sell during market crashes, which results in their loss.
PMS managers leverage the principles of behavioural finance to promote rational decision-making and avoid emotional trade.
They offer long-term strategies designed to navigate short-term volatility.
Active fund managers in PMS navigate volatility from strategic asset allocation, diversification, and real-time decisions.
Unlike passive investors, who follow market trends, these skilled managers actively modify the portfolio to reduce the risk and seize new opportunities.
This proactive strategy enables investors to attain improved risk-adjusted returns over time.

Who Should Invest in PMS? Investor Profile Breakdown

Portfolio Management Services (PMS) are tailored investment solutions designed to meet the specific needs of certain investor profiles.

Here’s a breakdown of who should consider investing in PMS:

Ideal Investor Profiles for PMS:

High Net Worth Individuals (HNIs): PMS is mainly structured for HNIs that can meet substantial investment thresholds.
Experienced Investors: People with a deep understanding of financial markets who seek personal investment strategies may find PMS advantageous.
Investors Seeking Customized Portfolios: The PMS provides customised portfolios aligned with individual risk appetites, and financial goals combined with investment horizons, providing a level of optimization beyond standard investment products.

Minimum Investment Requirements:

The Securities and Exchange Board of India (SEBI) mandates a minimum investment of 50 lakhs for PMS.

Expected Returns:

Returns from PMS may vary depending on the strategy, market status, and expertise of the portfolio manager.

While the PMS can give better returns than traditional investment, it is necessary to identify that high returns often come with increased risk.

Bonanza Wealth’s PMS Offerings:

Bonanza Wealth offers a series of PMS options for the needs of various investors. Notably, they offer investment opportunities with entry points as low as ₹50 lakh, making the PMS more accessible to the broader audience. For example, their “Aegis” strategy focuses on a balanced approach, ensuring risk-working returns, and combining stability with growth by investing in a mixture of equity and defensive assets. Meanwhile, the “Edge” strategy actively invests in companies with high-development sectors and strong fundamentals, which target better returns through tactical allocation.

PMS is suitable for investors who can meet minimum investment criteria and are seeking individual portfolio management. Bonanza Wealth offers flexibility in investment amounts and strategies, catering to investors with a wide range of profiles.

Understanding Risks: Is PMS the Right Choice for You?

Portfolio management services (PMS) offer personalized investment strategies, but it is necessary to understand the related risks and requirements to determine if they are a perfect fit for you.

Market Volatility

PMS investment is usually concentrated in equity, making it susceptible to market fluctuations.
Investors should assess their risk tolerance before committing to PMS.
While professional managers try to reduce risks, the inherent instability of the stock market can cause potential losses, especially in the short term.

High Fees

PMS often receives higher fees than other investment avenues. These may include management fees, performance-based fees, and administrative fees.
According to Investopedia, fees for managed accounts may be between 0.5% and 1.0% of the assets under management.
Over time, these fees can significantly affect net returns, so it is important to understand the fee structure well.

Minimum Capital Requirements

The Securities and Exchange Board of India (SEBI) mandates a minimum investment of 50 lakhs for PMS. This high entry barrier makes PMS more suitable for high-net-worth individuals.
As noted by InCred Premier, this substantial minimal investment ensures that PMS providers can offer individual services to suit their customers’ specific objectives and risk profiles.

Investment Horizon: Long-Term vs. Short-Term

PMS is generally more aligned with long-term investment horizons. Long-term investments allow portfolios to overcome short-term market recessions and benefit from the compounding of returns.
As highlighted by Western & Southern Financial Group, long-term investors can tolerate higher risk, while short-term investors often prefer low-risk options to preserve capital.

Therefore, PMS may not be suitable for investors to get quick benefits or for people with short-term financial goals.

While the PMS provides customized portfolio management and high returns capacity, it comes with consideration for market volatility, high fees, adequate capital requirements, and long-term investment horizons. Future investors should carefully evaluate these factors to suit their financial goals and risk tolerance to determine whether PMS is an investment vehicle suitable for them.

PMS Performance Trends & Market Outlook for 2025

As we progress through 2025, portfolio management services (PMS) are conducive to developing market dynamics, focusing on areas ready for development and aligning with global and domestic trends. Here is an overview:

PMS Performance Trends in 2025

Strategic Adjustments: PMS managers are refining their strategies to emphasize growth areas while avoiding macro-sensitive areas. The purpose of this approach is to cash on emerging opportunities and reduce the risks associated with economic ups and downs.

Expected Sectoral Growth and Investment Themes

Travel and Tourism: The sector is experiencing significant expansion, extending beyond small cities beyond big cities, driven by the government’s initiative to increase domestic travel and promote tourism. m.economictimes.com
Real Estate: There is notable potential for development, supported by favourable government policies encouraging urbanization trends and housing development.
Renewable Energy: India’s commitment to renewable energy is evident in its ambitious target of achieving 500 GW of renewable capacity by 2030, offering adequate investment opportunities in solar, wind, and battery storage projects.
Agriculture and MSMEs: The Union Budget 2025-26 emphasizes agriculture and micro, small, and medium enterprises (MSMEs) as major development drivers, in which improvements are made to strengthen farmers and promote rural development, which leads to improvement in these areas.

Future Outlook Based on Global and Indian Market Trends

Economic Growth Projections: India’s economy is anticipated to grow between 6.7% and 7.3% in fiscal year 2025 to 2026, propelled by strong domestic demand and increased government spending.
Infrastructure and Private Investment: Infrastructure improvement is expected to increase private investment in a strong banking sector and healthy corporate balance sheet, which contributes to continuous economic expansion.
Technological Integration: The asset management industry is looking at a change in the direction of integrating emerging technologies, such as artificial intelligence, to increase investment strategies and operational efficiency.

In summary, PMS strategies in 2025 are focusing on high-development areas such as travel, real estate, and renewable energy, while taking advantage of technological advancements to navigate the evolving economic landscape.

PMS Regulatory Updates & Compliance Changes in 2025

Portfolio management services (PMS) in India are subject to evolving rules aimed at increasing transparency, protecting investors, and maintaining market integrity.

Here’s an overview of the key regulatory updates and compliance changes in 2025:

1. Introduction of Structured Investment Funds (SIF):

In 2025, the Securities and Exchange Board of India (SEBI) introduced a new Structured Investment Fund (SIF), positioned between traditional mutual funds and PMS.
SIFS allows asset management companies to offer investment strategies with a minimum investment requirement of ₹10 lakh per investor in all strategies within a particular AMC.
These funds are designed to provide investors access to more sophisticated investment strategies while maintaining regulatory oversight.

2. Enhanced Oversight on PMS Distributors:

SEBI has made collective vigilance on the distributors of PMS through the Association of Portfolio Managers in India (APMI).
The purpose of this instruction is to strengthen the regulatory structure and ensure that the distributors follow ethical standards, protecting investor interests.

3. Compliance Audit Timelines:

SEBI has proposed to expand the compliance audit timeline for PMS providers from 2 months to 6 months.
This extension aligns with a statutory audit and aims to reduce the burden on auditors and firms, ensuring a more intensive and accurate compliance assessment.

What Investors Need to Know Before Investing:

Due Diligence: Investors should conduct complete diligence on PMS providers, including reviewing their regulatory compliance history and understanding specific strategies employed.

Risk Assessment: It is important to assess the risk profile of PMS, especially with the onset of SIF, which can include high-risk investment strategies.

Regulatory Framework: Understanding the regulatory environment, including SEBI’s inspection mechanisms and compliance requirements, can help investors make informed decisions.

Transparency: Ensure that the PMS provider provides clear and transparent reporting on the portfolio performance, fee, and any related risk.

By informing about these regulatory updates and compliance changes, investors can navigate the developed landscape of PMS investment more effectively.

Why PMS is the Smartest Investment Move in 2025

Portfolio Management Services (PMS) is an excellent choice for active investors in 2025, which offers personalized strategies and expert management. With the ability to adapt quickly to market shifts, PMS allows high returns by focusing on high-development areas such as renewable energy, real estate, and travel. Unlike traditional investments, PMS provides a tailored portfolio that aligns with your risk tolerance and financial goals.

Best PMS strategies for financial success such as Bonanza Wealth’s Aegis and Edge strategies help to maximize returns, making it a smart option for high-net-worth individuals (HNIs) and seasoned investors.