How to Evaluate a PMS in India: The 7-Pillar Scoring Framework

A Portfolio Management Service exists to do something a mutual fund structurally can't: build a portfolio around you  your risk appetite, your existing holdings, your tax situation  rather than pooling your money into a standardized scheme alongside thousands of other investors. That customization is exactly why comparing PMS options is so much harder than comparing mutual funds. There's no single NAV chart to pull up, no standardized factsheet format enforced the way it is for mutual funds, and no common expense-ratio disclosure that lets you compare cost apples-to-apples in five seconds.

So most investors default to the only number every PMS brochure leads with: returns. A strategy that returned 34% last year looks obviously better than one that returned 18%  until you learn the first one did it by concentrating 40% of the portfolio in three mid-cap stocks, and the second one did it while never dropping more than 9% from its peak during a correction that took the first one down 27%.

This is the core problem a structured evaluation framework solves. Not by replacing returns as a criterion  returns still matter, a lot  but by placing them alongside six other dimensions that, together, describe how a strategy actually behaves, not just what its best year looked like.

PMS as a regulated category in India dates back to the Securities and Exchange Board of India (Portfolio Managers) Regulations, 1993, which took effect on January 7, 1993, and set the original minimum client investment at ₹25 lakh. For over two decades, that was the baseline  a relatively accessible entry point aimed squarely at India's growing base of affluent, self-directed investors.

Everything changed with the 2020 overhaul of the regulations. By April 2019, the combined AUM of the portfolio management industry had already grown to roughly ₹18,07,938 crore, and regulators concluded the framework needed to catch up. The 2020 amendments raised the minimum client investment from ₹25 lakh to ₹50 lakh, increased portfolio managers' minimum net worth requirement from ₹2 crore to ₹5 crore, and  critically for anyone trying to evaluate a PMS today  mandated the Time-Weighted Rate of Return (TWRR) methodology for performance reporting, replacing an older weighted-average approach that didn't properly account for the timing of client entries and exits.

That last change matters more than it sounds. Before TWRR was standardized, two PMS providers could report "returns" calculated in genuinely different ways, making brochure-to-brochure comparison misleading even when both parties were reporting in good faith. Today's more standardized reporting is part of what makes a rigorous, multi-pillar comparison framework actually workable  the underlying numbers mean the same thing across providers.

For most of PMS's three-decade history in India, evaluation has been a relationship-driven, manual process: an investor's wealth manager or relationship manager walks them through a small shortlist  typically whichever three or four strategies that firm distributes  and the investor picks based on a factsheet, a conversation, and trust in the relationship. It's a model built around access to information, not analysis of it.

That's shifting. The same forces reshaping wealth management globally  AI-assisted analysis, marketplace-style comparison, continuous rather than annual data refreshes  are arriving in the PMS and AIF space. Instead of a static factsheet an investor reads once, platforms are emerging that ingest live performance, risk, and portfolio-composition data across hundreds of strategies simultaneously and generate a standardized, comparable score that updates as new data arrives.

PMS Sahi Hai, described as India's 1st AI-powered PMS & AIF marketplace, and its AI product Nyra, are a direct example of this shift  applying a consistent scoring methodology across more than 1,000 tracked PMS and AIF strategies rather than the handful any single relationship manager might present. More on exactly how later in this piece; first, the framework itself.

Before evaluating PMS options against each other, it's worth being clear on how PMS differs from the investment vehicle most Indians know best  mutual funds  since the two are frequently compared by investors deciding where to deploy fresh capital.

For scale, India's mutual fund industry alone had grown to roughly ₹73.73 lakh crore in assets under management by FY26, up 12.2% for the year  a reminder of how much larger and more standardized the mutual fund ecosystem is next to PMS's smaller, higher-touch, higher-minimum category.

This comparison explains why PMS investors need a more rigorous evaluation approach than mutual fund investors do. A mutual fund investor can lean heavily on a standardized, SEBI-mandated riskometer and a comparable TER. A PMS investor is choosing a bespoke, individually managed portfolio with a materially higher fee load and less built-in standardization  which is precisely the gap a structured, multi-pillar framework is designed to close.