New Delhi, May 3 -- Once seen as competition to mutual funds, portfolio management services (PMS) providers are increasingly using them as building blocks. They are offering curated mutual fund (MF) portfolios to high-net-worth individuals (HNIs) who want the simplicity of MFs combined with professional, end-to-end portfolio management and execution. The typical investor profile: new-age entrepreneurs and senior corporate executives.

The shift has a clear tax rationale. Budget 2024's hike in short-term capital gains (STCG) tax on equities - from 15% to 20% - hit traditional stock-based PMS providers hard, particularly those running high-churn portfolios. Mutual fund-based PMS-es, with their structurally lower portfolio turnover and more ...