What is a Portfolio Management Service?

Portfolio Management Services (PMS), a service provided by SEBI Registered Portfolio Managers, involves the management of an investment portfolio comprising stocks, fixed income assets, debt instruments, cash holdings, and various individual securities. These portfolios are expertly handled by professional money managers and can be customized to align with specific investment goals.

How is a PMS engagement different from investing in Mutual Funds?

A PMS engagement is meant for high Net Worth Individuals (HNIs). Unlike mutual fund investors who hold units of a fund, PMS investors own individual securities. This ownership grants them the liberty and adaptability to customize their portfolios according to their personal preferences and financial objectives. A PMS investor can expect a higher level of service and access to the Portfolio Manager. While portfolio managers may oversee numerous portfolios, each PMS account has the potential to be distinct and tailored to the investor's unique needs and preferences.

What are the Operating Models available?

Discretionary: Under this model, the choice of the investment as well as the timings of the investment decisions rest solely with the Portfolio Manager.

Non Discretionary: Under is model, the portfolio manager only suggests or recommends the investment. The decision to invest as well as the timings of the investment rest solely with the Investor. However, the execution of trade is done by the portfolio manager.

Advisory: Under this model, the portfolio manager only suggests or recommends the investment. The follow-up actions (inclusion in the portfolio as well as the execution) rests solely with the Investor.

Who is an ideal PMS Investor?

Portfolio Management Services (PMS) offers investment solutions that primarily serve a specialized clientele. These clients may include individuals or institutional entities with substantial wealth.

These offerings are typically well-suited for investors who:

Seek to invest in various asset classes such as equities, fixed income, and other products.

Want a customized investment solutions tailored to their specific needs and preferences.

Aim for long-term wealth accumulation and growth.

Value a high level of personalized service and support.

What is the tax treatment in the case of a PMS Engagement?

The tax liability of a PMS investor would remain the same as if the investor is accessing the capital market directly. The Portfolio Manager will provide audited statement of accounts at the end of the financial year and periodic reports to aid the investor in assessing his/her tax liabilities.

What are the advantages of a PMS Engagement?

Professional Management: This service offers the expert management of portfolios with the aim of delivering long-term performance while effectively managing risk.

Ongoing Monitoring: It's crucial to understand that portfolios require continuous monitoring, and periodic adjustments are made to optimize results.

Risk Management: A dedicated research team is responsible for establishing the client's investment strategy and provides real-time information to support portfolio managers in controlling risk.

Effortless Operations: Portfolio Management Service providers offer customized services, taking care of all administrative aspects of the client's portfolio. They provide regular reports, to keep clients informed about the overall status and performance of their portfolios.

Flexibility: Portfolio Managers have a significant degree of flexibility when it comes to managing cash, which can be held at levels of up to 100% based on market conditions. They can also concentrate investments in the portfolios in favor of compelling opportunities.

Transparency: PMS services offer comprehensive communication and performance reporting. Investors receive regular statements and updates from the firm. Account statements provide a complete overview of individual securities held, including current values, cost basis, account activity (such as purchases, sales, and dividends), portfolio asset allocation, performance relative to benchmarks, and market commentary from the Portfolio Manager.

What are there risks involved in a PMS Engagement: All investments come with a degree of risk, which can include the potential for the reduction of the initial invested amount. The level of risk varies depending on the type of security chosen.