Important points from the article:
- Basant Maheshwari’s PMS has given returns lower than fixed deposits during the last 3 year period.
- Mutual Funds are far better alternatives to his smallcase and PMS offerings, which are tax inefficient and expensive.
- Unless you intend to investment more than 50 lakhs, a simple index fund will be cheaper and perform better – this is based on 3-5 year performance of his PMS.
- This article contains valuable information which Maheshwari will never tell you in his videos, so do make sure you read before you subscribe to any of his services.
Basant Maheshwari is one of the most popular YouTubers and “Finfluencers” in the country.
His daily Youtube videos garner 1 lakh views, through which he gives his opinion on everything under the sun and promotes his financial services; a few small cases, Portfolio Management Services (PMS) and BM Meets for which he charges 1 lakh for 30 minutes (Update: I have been informed the fee has been increased to 2 lakhs for 30 months).
He claims some of those who availed the ‘BM Meets’ service have turned around their failing businesses. Some have invested in stocks listed in the US stock market and generated life-changing wealth.
While these claims cannot be verified, what can be verified is his smallcase and PMS performance which, SEBI mandates, must be publicly disclosed.
Before we begin, this is an unbiased performance review. I have been following Maheshwari for a long time now.
His book ‘The Thoughtful Investor’ is one of the best books written by an Indian Author. I happened to read it 5-6 years ago, since it was highly recommended on ‘Valuepickr’.
Basant Maheshwari PMS Performance
Maheshwari’s smallcases have only been in existence for a couple of years. But his PMS was registered in 2015. It has been 8-odd years, enough time to evaluate if Maheshwari is a capable fund manager.
Let the numbers from SEBI’s website speak for themselves.
Maheshwari’s PMS has consistently underperformed their own benchmark (BSE 500). And the performance difference is huge.
In his videos, Maheshwari claims everyone has made money in the stock market after the Covid crash. Unfortunately, that hasn’t been the case with his own PMS.
The 3-year returns stand at an absolute dismal 6.42%, which is lower than what risk-free fixed deposits have delivered.
The returns over 5-year period have been massively disappointing too. 13.15% which is significantly lower than the worst performing index fund.
A comparison between Maheshwari’s PMS and returns from major indices during the last 5 years.
- Basant PMS – 13.15%
- Nifty 50 – 16.79%
- Nifty 500 – 20.36%
- Nifty Next 50 – 22.31%
- Nifty SmallCap 100 – 29.43%
- Nifty Midcap 100 – 29.68
To put those numbers into perspective, over the 5 year period, 1 crore invested would be:
- Basant PMS – 1.85 crore
- Nifty 50 – 2.17 crore
- Nifty 500 – 2.51 crore
- Nifty SmallCap 100 – 3.63 crore
The difference is huge.
A simple investment in any index fund would give an investor far better returns than Basant’s PMS – with far lesser risk and far lesser cost.
Lesser risk because his PMS is a concentrated portfolio of 5-7 stocks. If a couple of them go wrong, it could take several years to recover the losses.
Lesser cost because the average annual fee of a PMS is between 2 – 2.5%. On an investment of 1 crore, the fund manager will usually take away 2- 2.5 lakhs every year.
With index funds, the cost is low. As low as 0.2%, which can go to around 0.6% on the higher side. This means the cost varies between ₹ 20,000 to ₹ 60,000 for an investment of 1 crore – which is extremely low.
Index funds are lower risk and have given significantly higher returns than his PMS.
I am not even taking taxes into consideration because churning (not selling) the portfolio, incurs taxes on gains in PMS. A mutual fund or index fund does not pay taxes when they churn their portfolio.
An index fund is far more tax efficient, than a PMS or Smallcase.
Maheshwari has published more than 5500 videos on his Youtube channel, but not a single video educates his audience about high fees and tax inefficiency of PMS and Smallcases. I can tell you this without watching most of his videos.
People with little or no knowledge of the stock market are obsessed with stock names, which they believe can make them rich. Finfluencers like Maheshwari create FOMO by creating multiple smallcases and having a deadline for its closure.
Even his newsletters with hardly any real value are given away like a freebie in the state elections – all to lure people into voting subscribing for his Smallcases.
Basant Smallcases Review
Speaking of his smallcases, they have generally performed better than his PMS – however, they haven’t seen a downcycle and have been around only for about 2 years.
Most of his smallcases started at the beginning of the ‘small-mid cap’ bull market in 2023 and have performed at-par with their respective benchmarks.
- BM Vision 2030 – Outperformed
- BM Focused Small Cap – At Par
- BM Top 10 – Underperformed
- BM Horizon Hunters – At Par
Note: The info above is as of November 2024, based on data publicly available on the smallcase website.
Again, while the performance of his smallcase funds are acceptable, what most investors do not understand is the cost involved.
This is again something he will not tell you in any of his videos.
Unless you have a minimum amount of 25 lakhs to invest – the yearly fees Maheshwari charges is too high. An investor will make more money and better returns if they stick to low-cost index funds.
For example, his Small Cap fund charges ₹ 41,304 per year. Even if you invest 25 lakhs, the cost comes to 1.65% every year. A direct mutual fund will cost you under 1%. An index fund will cost you less than 0.5%.
These funds are safer, tax efficient and will give you better returns. Again, Basant won’t tell you this.
BM Horizon Hunters charges fees of nearly 60,000 a year. Unless you have 50 lakhs to invest, the cost is too high. Ideally you need upwards of 50 lakhs to 1 crore for any of his Smallcases to start making any sense.
From Trump and Modi, to Musk and Adani, to education and money being the only two purposes of life – Maheshwari’s Youtube gyaan covers almost all topics in the observable universe, how about a 2 minute analysis of his own PMS?
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