Portfolio management schemes, unlike MFs, have performance fee along with fixed fee

For an individual investor, other than equity mutual funds, there is also an option to invest in portfolio management schemes for their equity allocation. Fixed fees Among MFs, equity funds charge the highest fee, which typically aggregates to 2.5-3% per annum for most schemes. In PMS, too, the basic fixed fee is 2-2.5% per annum, but the flexibility is driven by the size of individual accounts through mutual agreement. In PMS and AIF, there is an ability to calibrate costs for individual investments as the investment size increases,” said Aashish Somaiyaa, chief executive officer, Motilal Oswal Asset Management Co. For example, someone investing the minimum ₹ 25 lakh in a PMS may have to pay a 2% recurring annual fee, whereas a Rs5 crore investor in the same PMS strategy may pay a lower fee thanks to the bigger lump sum. In PMS and AIF, there is a fixed fee plus performance-linked fee which can ultimately make the cost higher.