What if i told you that both these products involve taking over custody of your money with the fees being withdrawn from your account (without you paying them on a need basis)?
Buying and selling of stocks in your account also happens with our your involvement:
- While this may be projected as a convenience factor, in reality this may lead to unnecessary churn.
- That would mean higher brokerage costs bringing down your net returns.
- Giving away this ‘power to execute’ some times (not in all cases) may lead to conflict of interest.
- While most PMS and MF managers have noble intentions, the scope for mischief does exist in some cases.
Further exit loads and locks in are the norm in actively managed Mutual Funds and PMS. The latter having a 3% exit load in most cases.
Most mutual funds are over diversified leading to sloppy less-than-index returns. You may choose a PMS based on its ‘strategy’ but the median returns of most PMS are no better than an MF after fees.
RIA based Equity Advisory
So what is the solution? I would recommend a SEBI Registered Investment Advisory who provides equity advisory giving you transparency and clarity.
Someone who uses the power of technology and quantitative finance to make it clean and unbiased, in addition to the clean model. Be sure to check their performance both in the recent future and how the strategy would have performed in past periods.
Check this infographic below to understand how this model compares with other ‘traditional’ products.
If you are interested you may check the footnote below for one such provider[1] if quality and quant based equity advisory.
Happy Investing!
