What it means (plain English)
When you evaluate a PMS scheme, you’re trying to answer three questions:how much it returns,how much risk it takes, andhow predictable the journey is. Tail Risk Basics helps you quantify one part of that story.
Why it matters for PMS scheme selection
See the complete PMS evaluation framework
- Improves fairness in comparisons by adding context to headline returns.
- Helps identify trade-offs (return vs risk, upside capture vs downside protection, consistency vs bursts).
- Reduces the risk of “chasing” the last best period by encouraging multi-metric evaluation.
How to interpret it (practical checklist)
Try the relevant calculator/tool
Common pitfalls (how this gets misused)
Read our methodologyfor assumptions and limitations.
- Judging a scheme based on one metric alone.
- Comparing metrics calculated with different assumptions or data frequencies.
- Ignoring benchmark choice and peer-group context.
- Overweighting short histories or cherry-picked periods.
Related metrics to review together
Use Tail Risk Basics alongside these metrics to avoid one-number decision-making:
Related guides
- Risk Of Ruin
- Liquidity Risk In Small Cap Schemes
- Risk Parity Concepts For PMS
- PMS Sharpe Vs Sortino
- Max Drawdown Explained
FAQs
Tail Risk Basics is a concept used to evaluate PMS scheme performance, risk, or portfolio behavior. It helps you compare schemes more fairly than headline returns alone.
Use Tail Risk Basics alongside related metrics (drawdowns, volatility, and benchmark-relative measures) and review it across multiple horizons to reduce cherry-picking.
Common mistakes include focusing on one metric in isolation, comparing across different strategies/benchmarks, and relying on short track records.
What is Tail Risk Basics in PMS evaluation?
Tail Risk Basics is a concept used to evaluate PMS scheme performance, risk, or portfolio behavior. It helps you compare schemes more fairly than headline returns alone.
How should I use Tail Risk Basics when comparing schemes?
Use Tail Risk Basics alongside related metrics (drawdowns, volatility, and benchmark-relative measures) and review it across multiple horizons to reduce cherry-picking.
What are the common mistakes investors make with Tail Risk Basics?
Common mistakes include focusing on one metric in isolation, comparing across different strategies/benchmarks, and relying on short track records.