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Why Portfolio Management Services (PMS)?

  • Advantage of equities as an asset class
  • Solutions customised to needs of HNIs
  • Personalised attention
  • Portfolio Managers take buy / sell decisions on behalf of, but in consultation with a client
  • Portfolio Managers regularly interact with clients to update them on portfolio strategy, performance and market outlook

Who is an ideal PMS investor?

The investment solutions provided by PMS cater to a niche segment of clients. The clients can be individuals or institutions with a high net worth.

The offerings are usually ideal for investors who are:

  • Looking to invest in asset classes like equity, fixed income, structured products etc.
  • Desire personalised investment solutions
  • Desire long-term wealth creation
  • Appreciate a high level of service

Who can sign up for PMS?

The following investors are eligible to invest through PMS:

  • Resident Individuals
  • Hindu Undivided Families (HUF)
  • Body Corporates (Private / Public)
  • Registered Trusts
  • Non-Resident Indians (NRI)*
  • Partnership Firms or any other eligible investor

* Subject to RBI approval

How is PMS different from a Mutual Fund?

  • Management


    Provides ongoing, personalised access to professional money management services

    Mutual Fund

    Provides access to professional money management services

  • Customisation


    Portfolio can be tailored to address each investor's specific needs

    Mutual Fund

    Portfolio structured to meet the fund's stated investment objectives

  • Ownership


    Investors directly own the individual securities in their portfolio

    Mutual Fund

    The trustee owns shares of the fund and cannot influence buy and sell decisions

  • Minimums


    Significantly higher minimum investments than mutual funds. Minimum investment - ₹50 lakhs

    Mutual Fund

    Minimum investment - ₹5,000

  • Flexibility


    PMS products can be customised to meet special customer requirements

    Mutual Fund

    No customisation possible

Does one necessarily have to invest in cash to open a PMS account?

Apart from cash, the client can also handover existing portfolios 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.

Is there any contract between the Portfolio Manager and its client?

Yes. The Portfolio Manager, before taking up an assignment of management of funds or portfolio of securities on behalf of the client, enters into an agreement in writing with the client, clearly defining the inter se relationship and setting out their mutual rights, liabilities and obligations relating to the management of funds or portfolio of securities.

What is the tax treatment in PMS investment?

The tax liability of a PMS investor would remain the same as if the investor is accessing the capital market directly. However, the investor should consult his / her tax advisor for the same. The Portfolio Manager ideally provides audited statement of accounts at the end of the financial year to aid the investor in assessing his / her tax liabilities.

What can you expect from PMS?

When one has entrusted his money to a PMS, one can expect:

Better handholding from his portfolio manager than he has been accustomed to from his mutual fund. One can also expect to interact with the portfolio manager to discuss any concerns that he might have. To be updated on any major changes in asset allocation or in the Investment Philosophy relating to his portfolio. All administrative matters, including operating a bank account and dealing with settlement and depository transactions, will be handled by the Portfolio Manager.

On handing over one's money, he will receive a user ID and password from the Portfolio Manager, which will grant him online access to his portfolio details. He can use these to check back on his portfolio as often as he likes.

Keeping track of capital gains (and losses) for the taxman can be a depressing chore, when one has furiously churned his investments throughout the year. Opting for PMS will free him of this chore, as a detailed statement of the transactions on his portfolio for tax purposes comes as a part of the package.

What one pays for PMS?

Most Portfolio Managers allow one to choose between a fixed and a performance-linked management fee or a combination.

Fixed Fee: If one opts for the fixed fee, he may pay between 2.50% to 3.50% p.a. of portfolio value; this is usually calculated on a weighted average basis. This fee is apart from the actual expenses like custodian expenses, audit fee, brokerage on transactions etc., which may be charged on actuals.

Performance linked Fee Option: In the performance linked fee option, there is a fixed fee of around 1.5% to 2% along with a percentage of your profit - usually 15% to 20% - earned over and above a threshold level, which may range between 8% and 10%. Apart from management fees, separate charges will be levied towards brokerage, custodial services and towards meeting tax payments. When one opts for a performance-based fee, the profits are reckoned usually on the basis of 'high watermarking'.

What investment strategies are available?

PMS is offered in a wide variety of asset classes and investment styles, including large cap, mid cap, small cap, multi cap, value and growth and international asset.

Are there risks associated with PMS investments?

Yes. All investments involve a certain amount of risk, including the possible erosion of the principal amount invested, which varies depending on the security selected. For example, investments in small and mid-sized companies tend to involve more risk than investments in larger companies.