PMS Manager Evaluation Framework

Track record analysis. Look for: (a) at least 5 years live track record on the specific strategy under the same PM team; (b) full bull-bear cycle coverage including 2020 COVID and 2022 rate-cycle drawdowns; (c) Calmar ratio above 0.7 (return-per-drawdown-unit indicator); (d) consistent performance attribution — beating index by 3-4% in 4 of 5 years is more meaningful than beating by 20% in one year and underperforming in four. AMC infrastructure. Ownership stability matters because PMS strategies depend on team retention. AMCs that have been acquired, restructured, or seen senior PM departures within 12 months warrant additional scrutiny. Risk management infrastructure includes: independent CRO who can override the PM, transparent compliance with SEBI investment norms, no recent SEBI/APMI advisory or enforcement history. Operational quality covers timely SoA delivery, quarterly portfolio statement accuracy, audit-quality compliance with the agreed strategy mandate, and responsive RM coverage for client queries. References. Speak to 2-3 existing PMS investors at similar wealth tier. Specific questions: how is RM responsiveness during market stress? Are quarterly statements timely and accurate? Has the manager ever drifted from stated strategy? How are conflicts (e.g., disagreements on positions) resolved? Fees. Fee economics is the gate — net-of-fee alpha is the test. A PMS charging 2.5% management + 20% performance over 10% hurdle costs ~3.5-4.5% in good years. Gross alpha (PMS gross return minus benchmark) must exceed 4-5% for net-of-fee value to materialise. Many India PMS managers have not delivered net-of-fee alpha over rolling 5-year periods; this is the hard truth Trustner's framework focuses on.