PMS · Merisis Research · March 2026 · 6 min read
PMS vs Mutual Fund: Why the fee structure matters more than you think
Last updated: March 2026
The tax difference is larger than the cost difference
Most investors compare PMS and mutual funds on headline expense ratio. The comparison that matters is post-tax return over a 5-to-10 year holding period, and it is driven by three factors: direct ownership, your personal capital gains treatment, and the ability to harvest losses within your own portfolio.
What direct ownership actually means for tax
In a mutual fund, when the fund manager rebalances, the fund pays tax on the gains from the sale. Those gains are distributed across all investors. You bear a tax cost from portfolio decisions made by the fund manager. In a PMS, you own the stocks directly. When you sell a stock, the gain is yours. So is the loss. If you are holding a stock at a loss, you can sell it to offset gains elsewhere in your portfolio. A mutual fund cannot do this for you because your position is not separate from anyone else's.
Disclosure
Past performance is not indicative of future results. Tax treatment varies by individual. Please consult your CA for tax-specific advice. Investments are subject to market risk. SEBI Portfolio Manager Registration INP000006846.
