Debt PMS vs. Debt Mutual Funds
Debt PMS invests directly in bonds, NCDs, and debentures on behalf of clients — the client owns the securities directly in their demat account. Unlike debt mutual funds (which pool money), each client portfolio is customised. This allows for better yield optimisation, individualised tax planning, and direct security ownership.
- Higher Yields: 10–14% vs. 6–8% for typical debt MFs
- Direct Ownership: Bonds held in your own demat account
- Tax Efficiency: Indexation benefits for 3+ year holding periods
- Customisation: Portfolio tenure matched to investor's liquidity needs
- Transparency: Know exactly which bonds you own and their maturity dates
Debt PMS Portfolio Construction
How fixed income PMS managers construct portfolios:
- Credit universe limited to A+ and above rated instruments initially
- Issuer concentration: Maximum 10–15% in any single issuer
- Duration management: Portfolio duration matched to client's investment horizon
- Yield optimisation: Mix of government securities, PSU bonds, and corporate bonds
- Active monitoring: Quarterly credit review of all portfolio issuers