Vashistha Iyer

India taxes ESOPs twice... I've observed this in 2 of my previous companies. Will be paying more tax when the listing happens and will sell it. I'm all in for paying tax, but this arrogant tax policy should end.

While DIY investors debate PMS wrapper for MF, the PMSes everyday find more and more people struggling to manage their MF portfolios. Here's the usual journey of a PMS investor for MF wrappers : 1. Start off like most of us did. Invests in MFs sold by bank RMs or family agents. 2. Someone who is DIY-ing questions regular vs direct. 3. Investor takes some initial help and sets up some investments in Direct MFs. 4. They try to educate themselves, make mistakes and build a portfolio of 20-25 MFs minimum across regular and direct MFs (I have seen 75-80 schemes in one client portfolio). 5. They miss the one-on-one relationship that came with bank RMs or agents. Specially in uncertain markets. In FOMO. In Fear. 6. They find educational material and courses online supporting both passive and active mutual funds. 7. As they learn more, they realise it only gets more nuanced. Not simple. 8. The overwhelm is real. So is self-doubt. 9. They buy, but they never sell. 10. They realise, just like a lot of other things we can do ourselves but we don't, they would rather have someone manage it for them end-to-end. But in direct funds. 11. They understand there are no free lunches and their problem is critical enough to justify a reasonable fee for solving it. 12. In PMS, they invest in Direct mutual funds baskets and everything is delegated - purchase, redemption, SIPs, allocation et al. 13. They gain an advisor relationship who also helps them build a small DIY portfolio on the side, if they prefer, so they can participate in the thrill without making costly mistakes. 14. And lo behold! Contrary to the general commentary, some PMS comes at a fixed fee of 0.5% p.a and no profit share. Very quickly, here's how most UHNI decision making goes (the wealthy ones with double digit Cr portfolios) : 1. At some point in the past, already decided - I will pay for someone to handle everything that's not my primary business. 2. I want something that doesn't create frequent tax instances. 3. Take the fee and let me use the MF Basket. 4. I am paying for time and mind space. To me, this is building leverage for better use of my time on endeavours that can actually give me outsized returns. It really is that simple. DIY is not for everyone. PMS is not for DIY investors. PMS is also not for everyone.

PMS that just replicates an MF basket is a mutual fund with extra fees and a fancier pitch deck 💀 The real PMS edge? Customisation. Concentrated bets. That's it. "Tax-efficient" gets thrown around like it's some magic trick. Nobody explains HOW. Because the answer is... barely. Now for HNIs going global 🌎 — yes, diversify jurisdictions. Makes sense. But managing your own wealth across countries is NOT as easy as a tweet makes it sound. Compliance, filings, forex, structuring — it's a full-time job disguised as "freedom." The real answer? There isn't one single answer. It depends on how involved you want to be and how much you trust your advisor vs yourself 🤷‍♂️

Performance fees on top of a mutual fund portfolio - that too without a hurdle - is unusual, to say the least. It's asking for a profit share for recognising someone else's skill. When the underlying isn't allowed to charge a performance fee, layers on top shouldn't be allowed either.

The pitch reads well. The math underneath does not. The PMS fee sits on top of the mutual fund expense ratio, not in place of it. All-in: 1.1 to 2%. A direct MF portfolio does the same job at 0.5 to 1%. Tax pass-through is a feature of mutual funds, not the PMS wrapper. The moment the PMS rebalances between schemes, the demat books a redemption and tax follows. Profit sharing without a hurdle rate is not alignment. The manager keeps 20% of the upside and bears none of the downside. Investors pay carry for beating zero. A HNI with 50 lakh can buy 4 to 6 direct funds, pay an RIA a flat fee, and keep most of what the wrapper would have taken. The structure pays the provider better. Not the investor.

The most interesting aspect of these new disclosure norms is this: a near real-time read on how much a fund actually trades.