Portfolio Management Services, explore to know more

Portfolio Management Services (PMS) is a customized service provided by the experienced portfolio managers supported by a research team. In order to meet specific investment objectives, they manage equity, debt, fixed income, cash, individual securities in the portfolios. Investment in PMS gives you the advantage of choice and flexibility of securities under your portfolio. This service caters to High net worth clients.

One could utilize their existing asset allocation that will be revamped by the portfolio manager or can begin with idle cash. As mutual funds have a minimum amount investment that is Rs. 500 or Rs. 1000, PMS also has a minimum investment of Rs. 50 lakhs that could be in the form of cash or existing stocks.

Portfolio Managers provide the statement of accounts at the end of the financial year to assess the tax liability. To ensure maximum and healthy returns, they mainly focus towards the SWOT (strengths, weakness, opportunity and threat) analysis when it comes to investing in debt-equity, domestic- international, growth-safety and many other tools of investment.

PMS investments involves certain risk towards the amount invested as it’s all based on the stocks in the portfolio. The stocks selected in large cap companies are less risky than small and mid-cap companies. A few PMS service allows monthly investments in the form of SIP investment.

PMS investments involves certain risk towards the amount invested as it’s all based on the stocks in the portfolio. The stocks selected in large cap companies are less risky than small and mid-cap companies. A few PMS service allows monthly investments in the form of SIP investment.

Purpose of PMS – Involves investments into asset classes such as equity, debt, structured products and many more, a long-term wealth creation, a personalized investment solutions and a high appreciated level of service. In simple words, this service provides professional management of your investments in order to create wealth.

Service rendered by PMS

Discretionary: Here, the choice and decisions are completely handed over to the Portfolio Manager.

Non-Discretionary: Here, the portfolio manager can suggest their views and execute the trade, but the decision on the investment lies with the investor itself.

Advisory: Here, the portfolio manager can only suggest their views. While the decision lies with the investor to execute the trade.

In India, mostly portfolio managers offer Discretionary services.

Portfolio manager’s role in PMS:

Portfolio Managers make decisions on buying and selling of the securities with proper research and analysis for the portfolio. They invest directly in securities through focused portfolios. Here, unlike a MF’s Fund manager who handles and invest the pool of investment, PMS Fund managers takes care of individual portfolios and maintains every account independently. The most targeted asset by a portfolio manager in a PMS is equities.

In PMS, every investor’s account has a unique portfolio and the valuation done for each is different. There is no NAV, but the valuation of the portfolio is done based on a daily basis. The schemes of PMS are more of model portfolio and it differs to various investors reason being different entry time of investor, addition or redemption of investment, amount of investment, holding of the shares in the portfolio meaning fund managers comment over the stock would differ as new investor might not have the stock in the portfolio. The fund manager interacts with the investors frequently, especially for investors with huge portfolio have more focus on the investments.

Benefits of PMS:
  • Portfolio Monitored – In this service, the portfolio is regularly monitored and changes are made in order to optimize the growth of the portfolio. Asset class, namely equities are tracked continuously to maximize returns.
  • Professional Management – the portfolio is professionally management and the goals are set to earn long-term returns and it also ensures to manage the risk against portfolio’s performance.
  • Flexible – investors could have their choice of allocation to their portfolio unlike a mutual fund that has to stay at the set allocation. There is no impact on the holdings of the other investors.
  • Transparency – the investor is accessible to a complete report of the account statement and its portfolio’s performance on a regular basis. Along with the current value of the securities owned, the portfolio’s asset allocation, performance against its benchmark, stock holdings, portfolio managers market commentary and many more reports are shared with the investor.
  • Customised service – all the investors administrative aspects of the portfolio are taken care and the required report on the overall status of the portfolio and its performance is shared.
  • Research support – this team ensures the risk is in control with regards to any investment strategy and a detailed information is availed to support the portfolio managers call.
  • Diversification – the risk of the portfolio is diversified as the fund managers are experienced and are well aware of how to reduce the risk in your portfolio.
PMS charges as follows:

Management charges – this is the fund manager charges over the scheme provided by them, charges would vary as per the provider.

Profit Sharing – a few PMS schemes charge over the certain amount of profit generated over the returns of the fund. This charge differs from PMS provider to provider.

There are a few other charges that need to be considered such as custodian fee, transaction brokerage, audit charges, demat account opening charges. It is essential that every investor checks on the charges that the provider provides before going for this service.


PMS has the same tax implication as that of individual investors.

Summing up:

Portfolio managers take due care in managing the client’s assets and its investment. Their main goal is to take an effective investment decision that will assist in providing healthy and strong returns to the client’s portfolio.

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