Do PMS Returns on Websites Include Fees? Gross vs Net TWRR Explained

If you have ever opened a portfolio manager's website, seen a 22% five-year CAGR, and wondered whether that is before or after the 2% they charge you, here is the direct answer: it is after.

Every Portfolio Management Service you can legally invest in must be registered with SEBI under the SEBI (Portfolio Managers) Regulations, 2020. Those regulations, and the circulars issued under them, leave no room for discretion on how performance is presented.

SEBI's guidelines for portfolio managers, first issued in Circular SEBI/HO/IMD/DF1/CIR/P/2020/26 dated 13 February 2020 and now consolidated in the Master Circular for Portfolio Managers, lay down three rules that matter for this question.

First, portfolio managers must "report performance data net of all fees and all expenses (including taxes)". Second, they must "consider all cash holdings and investments in liquid funds, for calculation of performance" — no quoting the equity sleeve alone while the idle cash sits outside the calculation. Third, they must "ensure that performance reported in all marketing material and website of the Portfolio Manager is the same as that reported to SEBI".

There is a fourth line that investors rarely notice but should: the aggregate, firm-level performance a manager reports anywhere must equal the combined performance of all its actual client portfolios. That single sentence ended the era of the flattering "model portfolio" track record that no real client ever received.

So the PMS returns you see on a manager's website are net of fees. That part is settled by regulation. What is not settled — and what causes most of the confusion — is the gap between the strategy's net return and the return in your own account. The rest of this article is about that gap.

Gross return is what the portfolio's securities earned: price appreciation plus dividends, before anything is deducted. It measures the manager's stock selection and nothing else.

Net return is what remains after the cost of running the portfolio is taken out. In a PMS, those costs stack in layers.

Fixed management fee. Charged as a percentage of average daily assets under management, commonly in the 1% to 2.5% range depending on the manager and plan. SEBI's regulations allow fees to be fixed, performance-linked, or a combination, but explicitly prohibit any upfront fee.

Performance fee. Typically 10% to 20% of gains above a hurdle rate. SEBI requires that profit-sharing be computed on a high-water-mark basis over the life of the investment, so a manager cannot charge you twice for recovering ground it previously lost. SEBI's own FAQ for portfolio managers includes a year-by-year illustration showing zero performance fee in years when the portfolio falls or fails to beat the hurdle.

Operating expenses. Custody, fund accounting, registrar and audit charges. SEBI caps these at 0.50% per annum of average daily AUM, excluding brokerage.

Brokerage and transaction costs. Charged at actuals, which means every trade the manager places carries brokerage, securities transaction tax, exchange charges and stamp duty into your account.

GST. Levied on the fees above at the prevailing rate.

When SEBI writes "net of all fees and all expenses (including taxes)", every one of these five layers is inside the net number. That is the good news.

The word "taxes" in the SEBI clause refers to taxes borne inside the portfolio — securities transaction tax on trades, GST on fees, stamp duty on purchases. It does not refer to the income tax you pay on your own gains.

This is a structural feature of PMS, not a loophole. Unlike a mutual fund, where the fund is the taxable entity and you are taxed only on redemption, a PMS holds securities in your own demat account. Every sale the manager makes is a taxable event in your hands, at your own rate and holding period. Since the Union Budget of July 2024, long-term capital gains on listed equity are taxed at 12.5% (above the annual exemption) and short-term gains at 20%. The Income Tax Department's guidance on capital gains sets out the holding-period tests.

None of that tax is in the website number. Keep this in mind for the worked example below.

A brief note on gross figures: SEBI mandates that net returns be reported and be consistent everywhere; it does not forbid a manager from also showing gross returns on a factsheet. When you see two columns, the net column is the one that counts and the one that must match the SEBI filing.

Ask a manager how the net figure is computed and the answer is TWRR — the time-weighted rate of return. Understanding why that method was chosen explains most of the gap between the website and your statement.

The time-weighted return divides a portfolio's history into sub-periods at every point where money comes in or goes out, computes the return of each sub-period, and chains them together geometrically. Because a large client joining or exiting resets the calculation rather than distorting it, TWRR measures what the manager did with the money it had, independent of when clients chose to give it.

That property is why the CFA Institute's Global Investment Performance Standards (GIPS) have long treated time-weighted, net-of-fees presentation as the convention for managers who do not control client cash flows. Investopedia's explainer on TWRR makes the same point: it is the fair way to compare managers, precisely because it strips out investor timing.

India adopted the convention formally in stages. SEBI's August 2020 FAQ states that the performance of a discretionary portfolio manager "is calculated using time weighted rate of return (TWRR) method for the immediately preceding three years or period of operation, whichever is lesser", and walks through the sub-period method in an annexure.

Then, on 16 December 2022, SEBI issued its circular on performance benchmarking, valuation and reporting. As Business Standard reported, every investment approach must now be tagged to one of four strategies — equity, debt, hybrid or multi-asset — and measured against a benchmark chosen from up to three prescribed by the Association of Portfolio Managers in India (APMI). Managers must submit monthly TWRR reports to APMI within seven working days of month-end, and APMI publishes them on its website in a standardised format. The framework took effect on 1 April 2023.

The Master Circular ties this together: managers must present "the Time-weighted Rate of Return (TWRR) of the investment approach along with the trailing return of the selected benchmark", and firm-level performance data must be audited annually, with confirmation filed with SEBI.

The scale of the industry makes this standardisation consequential. APMI data for June 2026, as reported by Business Standard, puts total PMS assets at ₹43.3 trillion, of which the discretionary segment is ₹36.72 trillion, across roughly 2.2 lakh client accounts. A single consistent yardstick across that much money is a real achievement — and a real limitation, as the next section shows.

TWRR is the right way to judge a manager. It is the wrong way to judge your account. For that you need XIRR — a money-weighted return that does depend on when and how much you invested. Both numbers are legitimate; they answer different questions.

Suppose a strategy gains +20% in the first half of a year and loses −10% in the second half. Its TWRR for the year is (1.20 × 0.90) − 1 = +8.0%. That is the number every website, factsheet and APMI listing will show.

Now consider two investors.

Rohit's experience matches the website. Shalini's second tranche arrived after the strong half-year and just before the drawdown, so her total capital shrank. Both are in the same strategy with the same 8% TWRR. The website is not misleading anyone; it is answering "how good is this manager?", not "how did Shalini do?".

The practical implication: when your quarterly statement — which SEBI requires managers to send in a prescribed format — shows a return below the strategy's published figure, the first explanation to check is timing, not misconduct.

SEBI requires every client agreement to carry a fee illustration on a ₹50 lakh sample portfolio across three return scenarios, and SEBI's regulations set ₹50 lakh as the minimum investment. So let us use that number.

The illustration below uses representative industry terms: a 1.5% fixed fee, 0.5% operating expenses (the SEBI cap), 0.25% brokerage and transaction costs, and a 15% performance fee above a 10% hurdle, in a year when the portfolio earns 15% gross. Fees are computed on average AUM, as is standard practice. GST is ignored to keep the arithmetic clean.

Three numbers to take away: the gross return is 15.0%, the net return is 12.2%, and the fee drag is about 2.8 percentage points. The 12.2% is what SEBI requires the website to show. The 15% is what the stocks did.

A 2.8-point drag sounds modest in a single year. Over a decade it is not. ₹50 lakh compounding at 15% becomes roughly ₹2.02 crore; at 12.2% it becomes roughly ₹1.58 crore. The difference — about ₹44 lakh — is the price of professional management on this fee schedule.

That is not an argument against paying it. It is an argument for asking the only question that matters: does the manager's gross return beat what a low-cost index alternative would have delivered by more than the drag? If a strategy's net TWRR beats its SEBI-tagged benchmark over five and ten years, the fees have earned their keep. If it does not, the fees are the reason.

The published net TWRR is honest about fees at the strategy level. It is silent about four things that determine your personal outcome.

1. The published net is a blended average across all clients. Most managers offer two or three fee plans — a fixed-only plan, a hybrid plan and a performance-heavy plan — and many negotiate with large clients. The strategy-level TWRR nets out the aggregate fees actually charged across every account in the strategy. If you chose the higher-fee option, your net will sit below the published figure; if you negotiated a discount, above it. The website cannot know which plan you signed.

2. Your timing. As the Rohit-and-Shalini example shows, the same strategy produces different personal results depending on when each tranche went in. Your XIRR lives on your statement, not on the website.

3. Capital gains tax. Every sale inside a PMS is a taxable event in your hands. Long-term gains at 12.5% and short-term gains at 20% (on listed equity, post-July 2024) are paid by you, at your own timing, and are never part of any published TWRR. For a high-churn strategy, this can be the largest single gap between the website and your bank account.

4. Exit loads and early exit. Published TWRR assumes you stayed invested. SEBI caps exit loads at 3% in the first year, 2% in the second, 1% in the third and nil thereafter, but an exit inside that window takes a further slice the strategy figure never reflects.

It is easy to dwell on what the number leaves out. It is worth being clear about how much better the current regime is than what preceded it.

Like-for-like comparability. Every registered manager reports the same metric, on the same net basis, over the same trailing periods, against a benchmark from the same prescribed list. A 14% at one firm means the same as a 14% at another.

Fees are already in the headline. You do not have to reverse-engineer the impact of a 2% management fee from a gross figure. The regulation did that for you.

Manager skill is isolated from client behaviour. Because TWRR neutralises cash-flow timing, a strategy's record is not flattered by lucky inflows or punished by a large client's panic redemption.

The website figure is enforceable. It must match the SEBI filing, firm-level data is audited annually, and cash holdings must be included. A discrepancy is a compliance breach, not a marketing choice.

Benchmarks are no longer cherry-picked. Each approach is tagged to one of four SEBI strategies and measured against an APMI-prescribed index, so "we beat the Nifty" from a small-cap strategy no longer passes.

Public, monthly, standardised data. APMI's monthly disclosures mean an investor — or a platform — can compare hundreds of strategies from a single source rather than from a hundred differently formatted factsheets.

The honest counterpoints, briefly.

It is not your return. TWRR was designed to measure the manager, and it does that well. For your own outcome you need your account XIRR, which only your statement shows.

It hides fee-plan differences. The blended net figure can be a percentage point or more away from what an investor on the costliest plan actually earns. Always ask which plan the published number most closely reflects.

It excludes investor-level tax and exit loads. For a taxable Indian resident, the true after-everything return is lower than the net TWRR, sometimes materially.

Short histories are less informative. SEBI's FAQ frames the calculation over the preceding three years or period of operation. A strategy launched eighteen months ago shows a track record that has not yet been tested by a full cycle.

Six checks, in order.

1. Confirm the number is net. Look for "net of all fees and expenses" or "TWRR (net)" on the factsheet. If only a gross column is visible, ask for the SEBI-filed figure — it must exist and must match.
2. Cross-check on the APMI portal. APMI publishes every registered manager's monthly TWRR and benchmark in a standardised format. A mismatch between a website and APMI is a red flag worth raising before you invest.
3. Compare against the SEBI-tagged benchmark, not a convenient one. Alpha over the prescribed benchmark, net of fees, over five and ten years, is the only number that decides whether the fee is worth paying.
4. Ask for the three-scenario ₹50 lakh fee illustration that SEBI requires in the client agreement, and identify which of the manager's fee plans you are actually being offered.
5. Check that cash is included. SEBI requires it. A manager quoting "equity-only" or "deployed capital" returns is quoting a model, not a portfolio.
6. Run your own after-fee, after-tax estimate. A 15% gross strategy on a 2.5% all-in fee load, with 12.5% long-term capital gains tax on realised profits, is not a 15% investment. Know your number before you sign.

Everything above is knowable from public documents. Almost nobody reads them. The SEBI Master Circular runs to hundreds of paragraphs, each manager's disclosure document runs to dozens of pages, and APMI's monthly files are spreadsheets. The information is transparent; it is not accessible. That gap is exactly what PMS Sahi Hai was built to close.

Nyra reads the clause so you don't have to. Nyra, our AI Wealth Compass, ingests the SEBI-filed, APMI-standardised net TWRR for over 1,000 PMS and AIF strategies and maps each one to its SEBI strategy tag and prescribed benchmark. When you open the PMS comparison tool, you are comparing net-of-fees figures on a like-for-like basis — the same basis SEBI mandates, not a marketing deck's.

Nyra overlays your fee plan, not the blended average. Because the published net is an average across every client, Nyra asks which fee structure you are being offered and shows what the strategy's track record would have looked like on your terms. The difference between a fixed-only plan and a performance-heavy plan can be the difference between paying for alpha and paying for beta.

Nyra shows the hidden overlap that quietly compounds fees. A common HNI mistake is holding three PMS strategies that own the same fifteen stocks — paying three sets of fees for one portfolio. Nyra's portfolio analysis surfaces sector concentration and stock duplication across your existing PMS and AIF holdings, so the fee you pay buys diversification rather than repetition.

Nyra keeps watching after you invest. Fee terms, benchmarks and strategy tags can change, and SEBI requires managers to offer an exit when they do. Nyra's continuous monitoring tracks these changes alongside sector shifts and liquidity signals and sends actionable alerts, so the decision you made on the right numbers stays the right decision.

If you are newer to this asset class, start with our plain-language guide to what a PMS is and the PMS FAQs, or read how PMS Sahi Hai works. We are a SEBI-registered distributor, which means we are paid by the managers we onboard, not by you — and we tell you which managers those are.

Hard-earned wealth shouldn't rely on random advice. It should rely on the same numbers the regulator sees, read properly.

The regulation has done the hard work: every PMS in India now reports the same net-of-fees, time-weighted number, audited and benchmarked. The remaining work — translating that number into what you will keep, on your fee plan, after your tax — is where most investors stop reading and start guessing.

Don't guess. Compare PMS strategies on net TWRR with Nyra, see how each one fits your risk profile and existing holdings, and start your free portfolio analysis today. If you would rather talk it through, contact the PMS Sahi Hai team — we are in BKC, Mumbai, and on WhatsApp.