I have MF portfolio of about 1 Cr. Will it be a wise decision to move 50 L from MF to PMS. Risk appetite is Moderate and ok to see upto 20% negative returns for short term. Holding capacity 3-5 years.

Ans: Considering your risk appetite and investment horizon, moving 50 lakhs from your mutual fund (MF) portfolio to a Portfolio Management Service (PMS) requires careful evaluation.
Here are some points to consider before making a decision:
1. Risk and Volatility: PMS typically offers a more concentrated portfolio with higher exposure to individual stocks compared to mutual funds. While this can potentially result in higher returns, it also comes with increased risk and volatility. Ensure that you're comfortable with the higher level of risk associated with PMS, especially given your moderate risk appetite.
2. Track Record and Expertise: Before opting for a PMS, thoroughly research and evaluate the track record, expertise, and investment philosophy of the PMS provider. Look for consistent performance over various market cycles and assess their ability to generate returns in line with your expectations.
3. Fees and Charges: Understand the fee structure of the PMS, including management fees, performance fees, and other charges. Compare these costs with the expenses associated with your mutual fund investments to ensure that the potential benefits justify the additional expenses.
4. Diversification: Consider the impact of reducing diversification by moving a significant portion of your portfolio to PMS. Diversification helps mitigate risk by spreading investments across different asset classes and securities. Ensure that the PMS portfolio aligns with your overall asset allocation strategy and risk management goals.
5. Investment Horizon: While you mention a holding capacity of 3-5 years, it's essential to align your investment horizon with the PMS strategy. Some PMS strategies may have longer investment horizons, and exiting prematurely could hinder your ability to realize potential returns.
6. Review and Monitoring: Continuously monitor the performance of your PMS portfolio and stay informed about changes in the market environment and the PMS strategy. Be prepared to reassess your investment decision periodically and make adjustments as needed to stay on track towards your financial goals.
As a Certified Financial Planner, I recommend discussing your decision with a financial advisor who can provide personalized guidance tailored to your individual circumstances and investment objectives. They can help you weigh the pros and cons and make an informed decision that aligns with your financial goals and risk tolerance.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in