fbpx

What is Portfolio Management Services (PMS)?

  • Home
  • Portfolio Management Services ( PMS )
AIF & PMS Chatbot

Hello there!

Welcome to AIF & PMS Experts India Pvt. Ltd.

Portfolio Management Services (PMS) refers to an investment portfolio in equities, fixed income, cash, debt structured products and other individual assets that is managed by a professional money manager and can be adjusted to fit specific investment objectives. Unlike in mutual funds where investor owns units of the fund, when you invest in PMS funds, you own individual securities. You have the suppleness to customize your portfolio to meet your specific requirements and objectives. Despite the fact that portfolio managers may be in charge of hundreds of accounts, yours may be one of a kind.

Portfolio Management Service (PMS) – Things to Know about the Fund

Portfolio Management Service, or PMS, is a professional service in which certified and experienced portfolio managers, supported by a research team, manage stock portfolios on behalf of customers rather than the clients managing their own. India has one of the oldest stock market ecosystems globally, and the direct equity investment craze has been around for decades, with numerous iconic listings in the markets since the late 1970s. A substantial number of investors have equities portfolios in their Demat accounts that they manage based on their own experiences or with the help of brokers and equity consultants.

 

There are millions of Demat accounts; some of the largest publicly traded firms have as many as 2-3 million owners. While brokers provide equities research, advisory services, and an operational platform, investors are generally required to participate in investing discretion and operational elements. More crucially, both investors and service providers share the responsibility for outcomes. On the other hand, professionally managed portfolios hold the portfolio manager accountable to the investor. They are managed for a fee, and the investor has access to everything, including research, investing, and operations.

 

Benefits of Investing in Portfolio Management Services

PMS can be discretionary (where the fund manager makes choices on behalf of investors) or non-discretionary (where the fund manager must get an investor agreement for recommended investments). Mutual Funds are another option for professionally managed stocks investments, and they are also a popular choice. Take a look at some of the advantages of PMS:

 

  1. Premium Portfolio

People who manage their investments buy less quality and place a greater emphasis on price rather than value.

Individual investors (Non-Promoter Non-Institutional [NPNI]) have a lesser proportion of holding in the major indexes like Nifty, BSE 200, or even Nifty 500, even though there are thousands of listed firms. Non-index smaller firms have higher retail or NPNI holding. In their portfolios, there is a lean toward lower-quality equities. Nifty accounts for about 60% of the market capitalization, BSE 200 accounts for nearly 85% of the market capitalization, and Nifty 500 accounts for nearly 94 percent of the market capitalization.

 

  1. Transparent and Strong Holdings

PMS is transparent; therefore, if we use cricket terminology, investors can obtain a ball-by-ball report on their portfolio in PMS. Every trade is communicated to the investor, and the managers’ website offers a real-time portfolio view. The customer may examine a targeted portfolio of chosen equities in his holdings for Motilal Oswal PMS portfolios. Mutual funds often have large scattered portfolios ranging from 25, 30 to even 100 stocks (which limits transparency) and only make their holdings known once a month or quarter. And investors with 5/6/7 different funds in their portfolios wind up with around 250-300 equities in their portfolios. Even if they de-duplicate the holdings through thorough research, they will discover that they own just about everything there is to own in the market, resulting in dilution of returns. If you purchase the market, you can’t beat it.

 

  1. Customers are Focussed

PMS assists in focusing on mass and wealthy clientele. While mutual funds can employ SIPs and other methods to target new to the market and smaller groups, PMS is defined by its concentration on the mass wealthy and affluent. This segment of the Indian market is rapidly expanding, values flexibility, and, most significantly, is familiar with equity investment. The number of people who work on the investment in stocks is over three times that of those who invest in mutual funds. In any case, sweat equity has been a major source of wealth growth in the recent decade. Investing in PMS makes it simple to diversify your assets. 

 

  1. Based on Online Top Up

Because our portfolios have relatively low churn, registering for a SIP with Motilal Oswal PMS is an intriguing process. When an investor registers for a PMS-SIP, he or she is more than likely aware of the handpicked targeted list of high-quality equities that will be purchased month after month. A paperless and user-friendly PMS-SIP may also be registered online. Similarly, Motilal Oswal PMS allows investors to add to their PMS portfolio on a same-day basis by purchasing extra amounts online. Ideal for the day when a worldwide issue unrelated to local markets causes the Sensex to drop by 1000 points, only to recover in a few days!

 

Types of Portfolio Management Services (PMS)

In its broadest sense, Portfolio management is the science of deciding how to invest your money. The idea encompasses techniques and policies for aligning investment choices to a person’s goals, risk tolerance, and asset allocation needs. All portfolio management techniques aim to strike a balance between risk and return. Portfolio management is focused on analyzing the strengths and weaknesses of your investment selection approach to optimize returns relative to your risk appetite, whether you’re investing in shares, bonds, or any other sort of asset.

 

Even though portfolio management solutions differ, they all fall into one of four categories:

 

  • Active
  • Passive
  • Discretionary
  • Non-discretionary

 

  1. Active Portfolio Management

Active portfolio management necessitates a high level of market knowledge. The approach is referred to as “active” because it necessitates a continuous review of the market to acquire assets when they are cheap and sell them when they are overvalued. The approach necessitates rigorous market analysis, broad diversification, and a solid grasp of the business cycle.

 

  1. Discretionary Portfolio Management

The fund manager has total control over their client’s investment decisions when using a discretionary portfolio management technique. The discretionary manager makes all of their customers’ buy and sell decisions and employs whichever approach they believe is optimal. Individuals with substantial investment knowledge and expertise can only offer this plan. Clients who utilize discretionary managers are comfortable entrusting their investment decisions to a professional.

 

  1. Passive Portfolio Management

Because its proponents believe in the efficient market theory, passive portfolio management isn’t concerned with ‘winning the market.’ Put another way; they think that fundamentals will always be reflected in the underlying asset’s value. Risk-averse investors generally prefer passive techniques. Investing in an index fund that tracks the S& P 500 or another market index is one of the simplest methods to apply a passive approach.

 

  1. Non-discretionary Portfolio Management

A financial adviser, in essence, is a non-discretionary portfolio manager. They will explain the advantages and disadvantages of investing in a certain market or strategy, but without your approval, they will not carry it out. The main distinction between a non-discretionary and a discretionary strategy is this.

 

Summing Up

We hope the points mentioned above about Portfolio Management Services (PMS) will help you know and invest in the fund of PMS with proper planning. Know the details and follow the steps whenever required.

Types of PMS

Discretionary PMS

The Portfolio Manager is fully responsible for the PMS investment decisions made as well as the timing of such decisions under these services.

Non-Discretionary PMS

The portfolio manager's role in these services is limited to making PMS investment recommendations. The Investor is completely responsible for the investment decisions he or she makes, as well as the timing of those decisions. The portfolio manager, on the other hand, is in charge of transaction execution.

Advantages of PMS Funds

Proficient Management

The service offers portfolio management by professionals with the goal of achieving consistent long-term performance while minimising risk.

Continuous Surveillance

 It is critical to recognize that portfolios must be regularly evaluated and changes made on a regular basis in order to get optimal results.

Risk Management

Any firm’s portfolio managers are supported by a research team that is responsible for formulating the client’s investment strategy and giving real-time information to the PMS provider to support it.

Hassle-Free Operation

The client receives a tailored service from the Hassle-Free Operation Portfolio Management Service provider. The firm manages all administrative parts of the client’s portfolio and provides regular reporting on the portfolio’s overall status and performance.

Flexibility

The Portfolio Manager has a lot of flexibility when it comes to cash storage. He can accomplish an acceptable concentration in investor portfolios by investing disproportionate amounts in tempting alternatives.

Transparency

PMS service provides complete performance reporting and communications. The PMS vendor will provide investors with regular statements and updates. Web-enabled access ensures that all information pertaining to a client’s investment is simply a click away. Your account statements will show you the individual securities you possess as well as the total number of shares you own.

 Advice that is tailored to you

PMS funds provide customized investment advice to chosen clients in order to help them accomplish their financial goals. It can be set up to automatically exclude investments that you may already possess in another account or that you don’t want to own.

 Top Portfolio Management Services in India with the Largest Client Base:

When looking for the top portfolio management service in India, it’s a good idea to look at the broking house’s client base. If clients are satisfied with the portfolio service, it signifies that the brokerage company is offering services that can assist you in discovering fresh chances in the stock market.

Best Portfolio Management Services in India with Modest Charges:

The PMS fund house includes a variety of charges, such as entrance load charges, administration fees, and profit-sharing charges. The portfolio management service usually has an entrance load of around 3% and a management charge of 1% to 3%, but you should be aware that the management charge is entirely dependent on the portfolio management service provider.

Top Portfolio Management Services in India with World-Class Support and Services:

The broking house’s fund manager will assist you with portfolio management in any way he can. They will assist you in updating your PMS online, and the portfolio manager will take care of your portfolio because they understand how important it is. PMS fund house will also assist you in making purchasing and selling decisions based on the study paper.

 Best Portfolio Management Services in India with Highest Goodwill and Exposure:

When choosing a brokerage business for this, make sure the fund manager has the necessary knowledge to guide you properly. Additionally, selecting a reputable and trustworthy brokerage business is generally a smart idea. You must make one thing very clear: you can optimise your profit based on your portfolio, which is why you should seek assistance from an experienced professional.

PMS FAQ

What is Portfolio Management Services (PMS)?

Portfolio Management Services (PMS), a Portfolio Manager service, is an investment portfolio consisting of stocks, fixed income, debt, cash, structured products, and other individual securities managed by a professional money manager and tailored to meet specific needs investment objectives. Unlike a mutual fund investor, the units of the fund can be moderated; when you invest in PMS, you own individual securities. You have the freedom and flexibility to customize your portfolio to meet your specific needs and objectives.

Is Portfolio Management a good service?

Portfolio management services (PMS) is a highly customized solution for high net-worth individuals (HNIs), it offers greater flexibility with an investor’s money and higher returns too. So, if you have a substantial amount you want to invest, such as say a crore, the PMS advisors service can prove beneficial and here we provide the Best PMS service in India.

What is the difference between mutual fund and portfolio management?

Portfolio management services are often reserved for high-net-worth people, whereas mutual funds are available to a diverse group of investors. SEBI regulates mutual funds very strictly, however Portfolio Management services are not as transparent as mutual funds.

How much does a portfolio manager Charge?

The portfolio fee is fixed at 1.5% of the capital invested, and if the investor gets a profit of 10% or above on the amount invested, then the investor needs to pay 20% of the gained profit to the ASK PMS

Are PMS risky?

Yes. All investments have some risk, including the potential for the original amount invested to be eroded, which varies based on the asset chosen. Investing in small and mid-sized businesses, for example, has a higher risk than investing in bigger businesses.

How do portfolio management services work?

Professional money managers provide portfolio management services (PMS) to educated clients, which may be customised to fit individual investment goals. Through targeted portfolios, PMS service providers invest directly in equities.

Is PMS better than mutual funds?

Professional fund managers have generated better returns than Direct Equities. Moreover, PMS have generated superior returns compared to MFs & Indices over longer tenures.

How is PMS taxed?

A PMS investor’s tax burden would be the same as if the investor were directly accessing the capital market. However, the investor should get advice from his tax expert in this regard. At the conclusion of the financial year, the Portfolio Manager should produce an audited statement of accounts to assist the investor in determining his or her tax responsibilities.

Which is better AIF or PMS?

PMS and AIF there are many points of difference between Portfolio Management Services and Alternative Investment Funds like AIF offers a wide bouquet of investments while on the other hand PMS is majorly focused on listed securities.

What is PMS in banking?

PMS or Portfolio Management Service is a professional service where qualified and experienced portfolio managers backed by a research team manage equity portfolios on behalf of clients instead of clients managing themselves. The bank provides such services.

Who is a Portfolio Manager?

A portfolio manager is a professional responsible for making investment decisions and carrying out investment activities, managing the day-to-day portfolio and trading on behalf of vested individuals or institution and we are here to do it for you proving the best portfolio management services in India

What is the minimum net worth requirement of a portfolio manager?

The portfolio manager is required to have a minimum net worth of INR 5 crore.

What fees can a portfolio manager charge from its clients for the services rendered by him?

According to the SEBI (Portfolio Managers) Regulations, 2020, the portfolio manager must charge a fee for portfolio management services based on the agreement with the customer. The cost may be a set sum, a performance-based fee, or a combination of the two. The portfolio manager may not charge the customers any advance fees, either directly or indirectly.

What are the modes through which I can make investments in PMS?

Apart from cash, the client can also hand over an existing portfolio of stocks, bonds or mutual funds to a Portfolio Manager that could be revamped to suit his profile. However, the Portfolio Manager may at his own sole discretion sell the said existing securities in favour of fresh investments as well as PMS Online.

Who can invest in PMS?

Individuals and Non-Individuals such as HUFs, partnerships firms, sole proprietorship firms and Body Corporate.

Who is a prime PMS investor?

PMS’s investment solutions are tailored to a certain group of clientele. Individuals who have a high net worth might be customers. Investors who want to invest in asset classes including stock, fixed income, structured products, etc., who want individualized investment solutions, build long-term wealth, and value a high level of service may find the offers appealing.

What do you know about the tax treatment in PMS investment?

A PMS investor’s tax burden can be the same as the investor was directly accessing the capital market. However, the investor should get advice from his tax professional in this regard. After the financial year, the Portfolio Manager should issue an audited statement of accounts to assist the investor in determining his or her tax responsibilities.

Can we find any risk associated with the PMS investment?

Yes, the investments have some risk, including the potential for the principal amount invested to be eroded, and they vary with the basis of the asset chosen. Investing in small and mid-sized businesses, for example, has a higher risk than investing in bigger businesses.

What are the modes of investments in PMS?

Aside from cash, a customer can also provide a Portfolio Manager with an existing portfolio of stocks, bonds, or mutual funds, which can be restructured to fit his needs. On the other hand, the Portfolio Manager has the exclusive option to sell the current assets in favor of new investments.

PMS vs AIF

In PMS, there is no pooling of investor funds. A separate Demat account needs to be created for every independent PMS investor. Whereas in the case of AIF, pooling of funds is a necessity.

A minimum investment of Rs. 50 lakh is required for PMS. In the case of AIFs, an investor must invest at least Rs. 1 crore.

PMS investors have the choice to withdraw funds at any point in time. Close-ended units in AIFs have a lock-in period to which they must adhere.

PMS are of two types; discretionary and non-discretionary based on the authority of the fund manager. On the other hand, AIFs are grouped into three – Category I, II, and III, depending on where the funds are invested.

This is an important point to consider when trying to understand the difference between PMS and AIF. In PMS, there is no defined tenure for the securities. Instead, the agreement term between a fund manager and an investor is binding. In AIF, the tenure of the securities for Category I and II is a minimum of three years. This tenure can be further extended by another two years. The extension is subject to the approval of two-thirds of the investors by value of investment in the AIF. In case of no majority to extend, the AIF gets liquidated within one year following expiration. The expiration date is considered one year from the start date or a year from the extended time. There is no minimum tenure for Category III funds.

Every client’s funds have to be segregated into separate Demat accounts in PMS. No segregation is required in AIFs.

There is no cap specified on the number of investors for PMS. A fund manager can have any number of clients. The maximum number of investors to any AIF scheme cannot exceed 1,000.

While PMS has no specific requirements on Manager contribution, AIFs require managers to have continued interest. In the case of Category I and II of AIFs, managers should hold at least 2.5% of the corpus, or, Rs. 5 crores, whichever is lower. For Category III AIFs, a manager should hold at least 5% of the corpus, or, Rs. 10 crores, whichever is lower.