PMS Advanced — Manager Risk, Performance Attribution & Exit Decisions

Calculate the return contribution of holding each sector at portfolio weight, with stocks held at benchmark proportions within each sector. Subtract this from total portfolio return; the residual is stock selection alpha. The sector allocation contribution is what the manager added (or lost) by overweighting/underweighting sectors relative to benchmark.

AMCs provide attribution in their quarterly portfolio statements. For independent verification, sophisticated investors can run their own attribution using the disclosed positions and benchmark data. Trustner's annual review includes attribution discussion using both AMC-provided and independently-verified analysis.

Caution. Timing alpha is the most volatile and least repeatable. Managers who appear to consistently time markets often had a few lucky calls that drove headline numbers. Sustained timing alpha across 5+ years is rare; unless the manager has exceptional macro-research infrastructure, expect timing alpha to mean-revert toward zero.

Minimum 3 years to evaluate strategy through partial market cycle. Premature exit (under 18 months) often reflects investor anxiety rather than manager underperformance. The exception is if a clear trigger (PM departure, strategy drift, regulatory issue) emerges in the first 18 months — these warrant exit regardless of duration.

Plan exit across 2-3 financial years. Use the ₹1.25 lakh annual equity LTCG exemption per FY by staggering redemptions. Offset realised STCG/LTCG with STCL/LTCL from other holdings (booked at year-end). Coordinate with your CA. The tax-optimisation can save 1-2% of exit proceeds in many cases — meaningful at PMS-tier wealth.

Most AMCs require redemption from one PMS strategy and fresh subscription to another, even within the same AMC. This creates a tax event (like an exit and re-entry). Some AMCs offer "intra-AMC switch" mechanisms with reduced friction; check the AMC's offering. Tax treatment is the same regardless.

Yes — fee negotiation is common at higher ticket sizes. Above ₹2 crore allocation, negotiation to 1.75% management or 12% performance hurdle is achievable. Above ₹5 crore, further compression is possible. Trustner negotiates fees on the investor's behalf during empanelment discussions.

Depends on view of manager skill. If the manager will materially outperform, fixed-plus-performance is more cost-efficient (you pay only when they deliver). If preferring cost predictability, fixed-only is simpler. Trustner's framework includes back-tested fee comparison across both structures for empanelled PMS.