Speaking on Zee Business, Kshitiz Mahajan, Managing Partner & CEO of Complete Circle Wealth, and Poonam Rungta, Certified Financial Planner, explained how both mutual funds and model portfolios work and their respective roles in an investor's journey. According to reports from Zee Business, these experts highlighted that while both products aim to generate long-term wealth through equity exposure, the right choice depends on investor experience, risk appetite, and involvement level. Mint reports add that Specialised Investment Funds (SIFs) sit between Mutual Funds and PMS, offering flexible, advanced strategies with moderate entry levels and regulation. Investors should understand the differences and consult a financial advisor before investing.
As reported by Zee Business, mutual funds are pooled investment vehicles where money from multiple investors is managed by professional fund managers. Investors receive units based on Net Asset Value (NAV), while fund managers make decisions on asset allocation across large-cap, mid-cap, or sectoral stocks depending on the fund strategy. According to Mint, mutual funds remain the simplest option for retail investors with minimum investment ranging from ₹100 to ₹5,000 (SIP possible). They offer low to moderate risk level with high regulatory oversight from SEBI and high liquidity through open-ended funds. Experts noted that mutual funds are typically more suitable for beginners or passive investors who prefer professional management and minimal involvement in day-to-day investment decisions.
According to Zee Business reports, model portfolios are curated stock baskets created by research analysts or advisory platforms, often based on specific themes such as mid-cap, small-cap, defence, energy, or manufacturing. These portfolios are directly executed in an investor's demat account, meaning investors own the underlying stocks rather than fund units. Unlike mutual funds, model portfolios often come with lower entry barriers compared to PMS and AIF products, allowing investors to start with relatively smaller amounts. As explained by Mahajan, these portfolios are curated, distributed, and executed through platforms, with stocks held directly in the investor's demat account. Mint reports that SIFs offer limited customization compared to PMS, with minimum investment around ₹10 lakh and moderate to high risk level.
Specialised Investment Funds (SIFs) are investment instruments that sit between Portfolio Management Services (PMS) and Mutual Funds. As per Mint, SIFs are developed and evolved for investors who aspire to pursue more advanced investment and wealth management strategies than mutual funds, while still offering a lower entry barrier than PMS. These funds operate under very stringent and robust regulatory oversight from SEBI and are especially meaningful for investors who have a clear understanding of market risks and related complications associated with equity investments. SIFs offer advanced strategies such as hedging and long-short positions, which are generally unavailable in traditional mutual funds. They provide medium to high flexibility of management with moderate to high liquidity and high transparency through portfolio-level reporting, though not fund-level NAV. SEBI has set the minimum investment at ₹10 lakh for SIFs, making them accessible to investors with larger capital surplus.
As highlighted by Mahajan during the discussion, the key distinction lies in control - while mutual funds are fully managed by fund managers, model portfolio investors retain direct control over execution decisions in their demat accounts. However, this control comes with responsibility, as Mahajan cautioned that in advisory or model portfolio structures, control is with the investor. If you cannot handle that responsibility, mutual funds may be a better route. Both experts agreed that investors should avoid putting all their money into a single type of product and instead maintain a balanced allocation across mutual funds, index funds, and selective exposure to model portfolios. Mint reports emphasize that PMS offers the highest flexibility among all three options, with full customisation and very high regulatory oversight.
According to the experts' recommendations, investors do not necessarily need to choose one over the other. Mahajan recommended investing in a diverse manner, suggesting that investors allocate most of their investment capital to mutual or index funds while reserving 10-15 per cent for model portfolios if they want to try direct stock investments. He also emphasized the importance of portfolio review, suggesting investors should do a review after six months to make sure they are in line with market trends. Rungta warned against putting all money into model portfolios, stating she would not recommend these products to first-time investors due to the need for market understanding and ability to handle volatility. Mint reports conclude that together, these investment options cater to different investor risk levels, capital sizes, risk tolerances, and levels of sophistication, with all three being SEBI-regulated and requiring professional consultation before investment decisions.
