HEM Securities PMS Delivers 7.5% September Return Despite Nifty Falling 6% — SME Bets Outperform

The Quick Take

• HEM Securities' portfolio management service returned up to 7.5% in September even as Nifty 50 and Sensex declined over 6%
• The outperformance was driven by SME-focused and small-cap positions in the PMS, highlighting the divergence between large-cap indices and micro-market segments
• September's counter-cyclical PMS performance is unusual and raises questions about survivorship bias and concentration risk in the winning portfolios
• Retail investors allocating to PMS products are now scrutinizing which strategies have structural alpha vs. concentrated position luck

HEM Securities' portfolio management service delivering 7.5% returns during September 2026 — a month where Nifty 50 fell 6.4% — represents a 13+ percentage point outperformance versus the large-cap index benchmark. This scale of divergence is achievable in concentrated PMS strategies that hold SME-listed stocks, which are structurally disconnected from large-cap index movements due to low institutional ownership, limited FPI access, and event-driven price discovery. SME-segment stocks often rally on company-specific triggers (board approvals, earnings, order wins) that are independent of macro sentiment that drives the Nifty.

The alpha generation in SME-focused PMS strategies comes with commensurate risk: the same illiquidity that insulates SME stocks from large-cap selloffs also creates exit risk when the PMS needs to rebalance or when client withdrawals require liquidation. India's SEBI has been increasing scrutiny of PMS performance reporting after several high-profile cases where reported returns failed to account for impact cost — the spread between reported NAV and achievable exit price in a thinly-traded SME stock. HEM Securities' 7.5% report requires scrutiny of whether the portfolio can realize those returns on a sale without moving prices.

The September outperformance data will attract new capital into HEM Securities' PMS, raising the AUM and potentially forcing the strategy to scale up into stocks it previously avoided due to liquidity constraints. This is the paradox of PMS alpha: the most alpha-generative SME positions are only exploitable at small AUM, and inflows triggered by published outperformance often dilute future returns. Track HEM Securities' AUM growth trajectory post-September disclosure and whether the strategy can maintain SME concentration at larger scale or is forced toward mid-cap stocks with lower alpha potential.

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