The Only Long-Term PMS Equity Mutual Fund Portfolio You NeedThe Only Long-Term PMS Equity Mutual Fund Portfolio You Need

Part 2 of our series on All Weather Equity. In the first piece we made the case that investors don't have to choose between active and passive funds. Both earn their keep. This piece is about the harder question: what does that blend look like, and what has it done with real money on the line?

 

Owning equity mutual funds should be simple. Pick a few good ones, hold them and get rich slowly. But in practice, it involves a running series of decisions you need to keep making. Which of the 900-odd equity schemes should you invest in? How active or passive should your investments be? What do you do when the fund that looked brilliant for three years goes dud for the next two? 

Managing all this continually as the size of the portfolio increases requires a level of knowledge, understanding, and time that is difficult to set aside for most people. We believe our All Weather Equity (AWE) PMS strategy is the cleanest way we know to hold Indian equity through mutual funds without betting everything on one market segment, one manager or one style of investing.

Before we dive into the strategy, here’s how AWE has fared since inception.

Four Good Years, On the Record

We have been running the AWE Investment Approach at Capitalmind since July 2022, long before the industry warmed up to the idea of managing mutual fund portfolios in a PMS. Four years on, we're finally talking about it, now that there's a track record to back our investment philosophy.

Since then AWE has delivered a 16.7% CAGR against the Nifty 50 TRI’s 12%, net of our management fees and all transaction costs. It did that at a lower day-to-day volatility (10.4% annualised versus 12.3% over the same window). In other words, more return per unit of risk, not just more return.

Drawdowns meanwhile have tracked broadly in line with the benchmark.

On a one-year rolling basis, AWE beat the Nifty 50 TRI 77% of the time, meaning that roughly one in every four years, it didn't. However, over a rolling 2-year and 3-year holding period, AWE outperformed the benchmark 100% of the time. The odds of beating the benchmark improved the longer investors stayed invested.

This performance has come through while the portfolio has carried a large-cap tilt throughout, around 60% in large caps since inception, sitting at 63% large, 16% mid, 18% small, 3% cash and other assets as of end of June 2026.

With the “kitna deti hai” question out of the way, here’s how we build our All Weather Equity strategy:

Straightening the active vs. passive loop

We settled the active vs passive debate in our last article. Active alpha is real, but it mostly appears as we go down the market caps.

That’s the passive-to-active chassis that houses our All Weather Equity engine - 40% allocation to a passive sleeve of index funds and ETFs tracking large-cap indices and a 60% allocation to active equity mutual funds chosen by a rules-based model that doesn't care whose logo sits on the factsheet.

Now you may ask why 40/60, and not 20/80 or 50/50? The 40/60 split isn't a compromise picked to sound balanced. A pure index portfolio is honest and cheap, but it also caps your portfolio’s performance to "the index, minus a tiny fee". For a five-year-plus investment horizon, we think leaving alpha on the table is an expensive choice. Hence, we keep our active allocation at 60% because that's where the benchmark-beating potential comes from. The remaining 40% in passive index funds keep the costs low and the portfolio tethered to broad market returns when active managers hit a lean patch.

That’s the All Weather Equity philosophy: Alpha with an anchored beta. The low-cost beta tracks the market in the background while the active sleeve goes chasing returns.

How we actually pick the funds

AWE holds six to eight mutual funds. The passive sleeve is the simpler half. We're after the index fund that tracks its benchmark most faithfully and cheaply: a minimum four-year track record, then a peer comparison on size, expense ratio, and how tightly the fund hugs its index.

The active sleeve is where the work is. Our quant model shortlists on a four-year-plus record and then scores them based on the persistence of their risk-adjusted returns, the consistency of their performance, volatility and drawdown management. From the shortlist we hold 4 to 6 funds, chosen to keep market-cap and investing styles diversified. It’s worth noting that our fund selection is AMC-agnostic. The model doesn't care whose name is on the fund. We aim for one fund per AMC so that a single fund house going through a bad patch doesn’t drag the entire portfolio down.

Once live, the portfolio is reviewed twice a year. A fund stays if it's still in our shortlist. If it drops out, it's replaced by the next best-ranked fund. New money coming in is invested proportionately to take drifted client portfolio weights back to the model weights rather than triggering sells and the tax bills that come with them.

Who it's for, and who it isn't

The AWE is built to be the one equity portfolio a person needs: a single, comprehensive equity allocation you can fund with a lump sum, a monthly contribution, and then hold. It suits investors with a horizon of at least five years, who want broad market-cap and style diversification without holding 10+ mutual funds. And someone who trusts a process over a star manager's instinct, the sort who reads a rules document and feels calmer, not bored. 

It is designed to be the only equity allocation you need to hold for any of your long-term goals. Fill it, and then do the genuinely difficult part: mostly leave it alone.

It is not for someone whose real objective is capital protection, anyone who'll lose sleep over a 15-20% fall, or anyone who enjoys rotating between themes and hot sectors. "Fill it, shut it, forget it" only works if you can genuinely forget it for five years, including the years you'd rather not look.

Back to that crowded folio

The point of All Weather Equity was never to pick a single clever fund. It's a way of turning the accidental pile-up, the overlapping schemes, the low-grade anxiety about whether any of it fits together, into one portfolio that runs on rules rather than reflexes. 

July 2026 marks the fourth anniversary of All Weather Equity, one of the longest-running active + passive mutual fund PMS strategies in the country. If you're sitting on a drawer of mutual funds you're no longer sure about, that's a fair place to begin. For investments of ₹50 lakh or more, you can reach out to our Client Advisory Team to review your existing mutual fund investments and walk you through how All Weather Equity would fit your portfolio.

Disclaimer: Investing in securities markets involves risk, and no specific returns or performance are guaranteed. This communication is issued by Capitalmind Financial Services Private Limited for informational purposes only and does not constitute investment advice or a research report. It is not directed at residents of the United States of America, UAE, Singapore, or any jurisdiction where access without proper registration is restricted. While the information is believed to be reliable, Capitalmind and its affiliates doesn't guarantee its accuracy or completeness, and shall not be liable for any loss arising from reliance on this material. Performance data, where mentioned, is based on past results, shown net of fees unless stated otherwise, annualized for periods exceeding one year, is not verified by SEBI, and should not be considered indicative of future performance. NAVs used are net of Capitalmind's management fees and transaction costs. The performance of the portfolio may vary from that of other investors and that generated by the Investment Approach across all investors because of the timing of contributions and outflows, market conditions, differences in the portfolio composition because of restrictions and other factors. Please exercise independent judgment and seek professional advice before investing. This material is confidential and may not be reproduced or redistributed without prior written consent. Capitalmind provides clients with an option for direct onboarding without the intermediation of persons engaged in distribution services. For further details, please refer to our Disclosure Document at https://www.capitalmind.in/disclosure#disc-pms.