PMS or Portfolio Management Services is a licensed and professional investment service offered to cater to the objectives of niche segment of long term investors.
The PMS industry in India is regulated by the Securities and Exchange Board of India (SEBI), which sets the guidelines and requirements for PMS providers to operate in the country. SEBI has prescribed a minimum investment corpus of Rs 50 lakh for individuals to be eligible for PMS services.
Portfolio management services (PMS) are offered by specialized financial companies to manage the investment portfolio of high net worth individuals (HNIs), UHNIs, NRIs, or institutions.
PMS providers invest on behalf of their clients in a customized portfolio of stocks, bonds, mutual funds, and other securities based on the clients’ investment objectives and risk tolerance. The PMS providers charge a fee for their services, which is typically a percentage of the assets under management (AUM).
PMS providers in India offer various types of portfolio management strategies, including value investing, growth investing, income investing, and quantitative investing, among others. They provide regular updates and performance reports to their clients and aim to achieve superior returns on their clients’ investments while managing risk effectively.
PMS strategy is meant to invest in a concentrated basket of 15-40 well-researched companies. Such a focused approach generates superior long term performance and is meant for sophisticated and informed investors who really want money to work harder for them and are focused on long term performance and, not bothered by short to medium term volatility.
PMS strategy works on the concept of personal demat holding and with common research, and not a pooled stock portfolio across investors. With the rising participation of young and retail investors in mutual funds, pooled stock portfolio concept is prone impulsive and behavioural flows which rise with rising markets and peak out at higher valuations, and fall with falling markets and bottom out at attractive valuations. In PMS, one investor’s behavioural reactions to market movements doesn’t impact other investor’s portfolios.
A Portfolio Management Service, or a PMS gives access to direct shareholding in the businesses, making it a more direct method of investing. When one invest in companies, it opens the door to not only grows with the rise in corporate earnings and dividends, but also the growth of investors own intellectual capital. As here investor clearly gets to know what’s happening in the portfolio. In the long term, growth in all three matters and adds up.
Since PMS works with a concentrated approach, there is no compulsion to churn a stock that is performing irrespective of its rising weight in the portfolio over years. What matters is the expected earnings and growth potential in the businesses held. Unlike this, in mutual funds, beyond a point, at times fund manager may be forced to let go of a performing stock to cut its rising weight, given the regulations.
The PMS provider will initiate a client onboarding process, which includes a detailed discussion with the client to understand their investment objectives, risk tolerance, and financial goals. The PMS provider will also collect necessary documents and information from the client, such as PAN card, KYC details, and investment declaration form.
Based on the client’s investment objectives and risk appetite, the PMS provider will construct a customized portfolio that includes a mix of equity, debt, and other asset classes. The portfolio construction process takes into consideration the client’s preferences, investment horizon, and liquidity needs.
Once the portfolio is constructed, the PMS provider will execute the investment strategy by buying and selling securities in the market. The PMS provider may use various investment techniques, such as fundamental analysis, technical analysis, and quantitative analysis, to make investment decisions.
The PMS provider will monitor the performance of the portfolio on an ongoing basis and make necessary adjustments to maintain the desired asset allocation and risk profile. The provider may rebalance the portfolio periodically to ensure that the asset allocation remains aligned with the client’s investment objectives and risk tolerance.
The PMS provider will provide regular updates to the client on the performance of their portfolio, including the value of the portfolio, returns generated, and any changes made to the asset allocation or investment strategy. The provider will also communicate with the client on any market events or investment decisions that may impact the portfolio.
PMS providers charge a fee for their services, which typically includes a management fee, performance fee, and other charges. The fee structure and charges may vary depending on the PMS provider and the type of service offered.
Risk Factors – Investments in Mutual Funds are subject to Market Risks. Read all scheme related documents carefully before investing. Mutual Fund Schemes do not assure or guarantee any returns. Past performances of any Mutual Fund Scheme may or may not be sustained in future. There is no guarantee that the investment objective of any suggested scheme shall be achieved. All existing and prospective investors are advised to check and evaluate the Exit loads and other cost structure (TER) applicable at the time of making the investment before finalizing on any investment decision for Mutual Funds schemes. We deal in Regular Plans only for Mutual Fund Schemes and earn a Trailing Commission on client investments. Disclosure For Commission earnings is made to clients at the time of investments. Option of Direct Plan for every Mutual Fund Scheme is available to investors offering advantage of lower expense ratio. We are not entitled to earn any commission on Direct plans. Hence we do not deal in Direct Plans.
AMFI Registered Mutual Fund Distributor | ARN- 3511 | Initial Registration Date- 31.03.2003 | Valid Upto- 26.03.2025
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