The One-Year Illusion
A PMS strategy returned 42% last year. The category median was 19%. That's 23 percentage points of outperformance - extraordinary by any measure. Eighteen months later, the same strategy sits at the category median. The 23-point alpha has vanished entirely.
This isn't a hypothetical. It's the most common pattern in Indian PMS performance data. One-year outperformance is abundant. Sustained outperformance across multiple years, multiple market conditions, and multiple cycles is genuinely rare.
The question that matters isn't "who performed best last year?" It's "who has performed above their peer group consistently - and what do those strategies have in common?"
What "Consistency" Actually Means in PMS
Consistency doesn't mean delivering the same return every year. That's impossible in equity markets. A consistent PMS strategy is one that outperforms its category peers across different market environments - bull runs, corrections, sideways phases, and sector rotations.
The distinction matters because it separates two very different kinds of alpha:
Circumstantial alpha comes from being in the right style at the right time. A momentum-heavy small-cap strategy in a small-cap rally year. A deep-value approach when value stages a comeback. A sector-concentrated portfolio when that sector is in favour. This alpha is real while it lasts — but it's a function of market conditions, not repeatable skill.
Structural alpha comes from a process that extracts value across conditions. Superior stock selection. Disciplined position sizing. A risk framework that limits drawdowns without sacrificing upside. A portfolio construction approach that doesn't depend on any single market thesis being correct. This alpha persists because its source persists.
The AND Fintech Score is designed specifically to separate these two. By measuring peer outperformance over a 36-month trailing window - long enough to span at least one meaningful correction - it filters out strategies riding a single market wave and surfaces those delivering structural, persistent alpha.
Three Traits of Strategies That Stay Near the Top
We've studied the strategies that consistently rank in the
Top 10% and Top 25% of their categories on the AND Fintech Score .
While each has a distinct investment philosophy, a few patterns emerge
1. They Manage Drawdowns Before They Happen
The highest-returning strategy over any three-year period is
rarely the one with the worst drawdowns. In fact, the relationship often runs
the other way - strategies that limit their worst months tend to compound
better over full cycles.
This isn't intuitive. You'd expect risk-taking to correlate with higher returns. But drawdown math is asymmetric: a -30% fall requires a +43% recovery just to break even. A strategy that fell only -15% in the same correction needs just +18% to recover - and it gets back to compounding from higher ground much faster.
The consistently top-ranked strategies on the AND Fintech Score tend to have maximum drawdowns meaningfully below their category median. Not because they avoid equity risk - they don't - but because they have explicit frameworks for managing it. Position limits. Sector caps. Cash allocation rules during elevated valuations. Hedging mechanisms.
The Risk Metrics in AND Fintech Score lets you see this pattern directly - compare maximum drawdown across strategies within any category and you'll notice the top-tier strategies cluster at the lower end.
2. Their Alpha Isn't Concentrated in One Period
A strategy that generated all its three-year alpha in a single six-month sprint is a different proposition from one that generated it steadily across the window. Both might show identical 36-month numbers - but the second is far more likely to repeat the feat.
Look at alpha across both 1-year and 3-year (or 5-year) timeframes. A strategy showing positive alpha across all these windows has demonstrated that its approach works in the most recent period *and* over a longer arc. Strategies that show strong 3-year alpha but negative 1-year alpha may be coasting on a past period that's already faded.
The Why we track Alpha across 1 and 5 yrs article explores this multi-period lens in depth.
3. AUM Hasn't Outrun the Strategy
One of the most reliable patterns in PMS performance is the decay that follows rapid AUM growth. A small-cap strategy that delivered exceptional alpha at ₹200 Crore often struggles at ₹2,000 Crore - its own buying and selling now moves the stocks it trades. A concentrated portfolio approach that worked with 50 investors becomes harder with 500.
Strategies that sustain their ranking over time tend to manage AUM growth deliberately. Some close to new investors. Some widen their stock universe as AUM grows. Some shift market-cap exposure upward. The common thread is awareness - they recognise that AUM is a headwind and take explicit steps to manage it, rather than letting success erode the conditions that created it.
The ₹50 Crore AUM floor on the Best PMS In India Ranking ensures every ranked strategy manages meaningful capital. But it's worth checking whether a strategy near the top of the ranking has seen its AUM multiply recently - and whether its alpha trend has kept pace.
The Categories Where Consistency Is Hardest
Not all PMS categories produce consistent outperformers at the same rate.
Small & Micro Cap is the hardest category for sustained top-tier performance. Dispersion - the gap between the best and worst strategy is enormous. A strategy can be in the Top 10% one year and in the bottom half two years later, simply because the small-cap stocks it held rotated out of favour. Genuine consistency in this category is rarer and therefore more meaningful when you find it.
Large Cap shows the least dispersion. Most large-cap PMS strategies hold similar stocks, and alpha comes from marginal overweights and underweights rather than dramatically different portfolios. Strategies that consistently rank in the Top 10% of Large Cap are often those with the most disciplined risk management - because the return spread is narrow, risk control becomes the differentiator.
Flexi & Multi Cap sits in between. These strategies have the widest mandate - they can move across market caps, sectors, and styles. That flexibility is both an advantage (they can adapt to conditions) and a risk (their returns depend heavily on allocation calls). Consistent outperformers in this category tend to have a core approach they maintain through cycles, with allocation tilts at the margins.
What Happens When a Consistent Performer Slips
Even the best strategies have off periods. A strategy that's
been in the Top 10% for three years might drop to the Top 25% or even Top 50%
for a quarter. What matters is the reason.
Acceptable reasons: A style headwind (value underperforming momentum in a momentum-driven market), a deliberate cash allocation during elevated valuations (sacrificing short-term returns for drawdown protection), or a sector rotation that temporarily disadvantaged the portfolio's composition.
Concerning reasons: A change in fund manager, a significant AUM jump without a corresponding change in approach, departure from the stated investment philosophy, or a drawdown significantly larger than the strategy's historical range.
The AND Fintech Score's two-month tier confirmation window is designed precisely for this. A strategy doesn't get reclassified after one bad month - the tier changes only after the new position holds for two consecutive months. This prevents noise from obscuring signal, and gives you time to assess whether a dip is temporary or structural.
How to Use the Ranking to Find Consistent Performers
Step 1: Go to The Best PMS In India and filter by your preferred category. Note which strategies are in the Top 10%
and Top 25% tiers.
Step 2: Compare their alpha across timeframes. Strategies showing positive peer alpha across both short and long windows are demonstrating the consistency this article describes.
Step 3: Look at the risk side. Maximum drawdown, Sortino ratio - the strategies with the best risk-adjusted profiles within a tier are the ones most likely to sustain their position.
Step 4: Go deeper on 3-5 shortlisted strategies. Check their Individual Profiles for AUM trajectory, portfolio concentration, and benchmark comparison.
Step 5: Before committing, ask the Seven Evaluation Questions that go beyond numbers. Consistency in a ranking is a necessary condition, not a sufficient one.
The Bottom Line
In a universe of 400+ PMS strategies, the vast majority will
have at least one impressive year. Some will have two. Very few will remain in
the top tier of their peer group across a full 36-month window that spans
different market conditions.
Those few are worth finding. Not because past consistency guarantees future consistency - it doesn't - but because it's the strongest available evidence that a strategy's alpha comes from process rather than luck.
The AND Fintech Score exists to
surface exactly these strategies.
Start there.
---
Browse Best PMS In India - strategies ranked by score →
See PMS strategies ranked by Alpha[PMS strategies ranked by Alpha](/alpha-report) →