What is Portfolio Management Service (PMS)?

A Portfolio Management Service (PMS) is a customized investment product that is tailor designed to meet your specific investment objective. In a PMS you invest in stocks, fixed income instruments, cash, structured products and other individual securities, managed by professional portfolio managers.

How Portfolio Management Services is different from a Mutual Fund?

A PMS provides you a tailor-made investment solution based on your specific investment objective whereas a mutual fund is a common pool of money collected from investors with a similar investment objective. The securities remains in your de-mat account unlike mutual funds, who owns the units of the a mutual fund scheme.

What are the different ways to invest in Portfolio Management Service?

You can avail the services of PMS via three different ways: Discretionary, Non-Discretionary and Advisory.

In discretionary PMS, the portfolio manager takes the call and so the investment decisions remains with the portfolio manager only.

In non-discretionary PMS, the portfolio manager executes the transactions in consultation with the client and so will not be able to make independent decisions.

In Advisory PMS, the investment manager advises the client on for his investments and so the investor manages his own portfolio based on the recommendations of the portfolio manager and his own market knowledge.

But, In India majority of Portfolio Managers offer only Discretionary Services.

For whom PMS ideally suited for?

The Investment options provided by PMS suited to High Net worth Individuals or Institutions.

How PMS operated?

The client gives the Power of Attorney to the Portfolio manager to manage investments on his behalf.

What are the advantages of PMS?
  • Custom Design.
  • Regular monitoring and so periodic changes are made to optimize returns.
  • Concentrated portfolios.
  • Detailed regular investment updates.
  • Professionally managed by specialists.
  • Audited statements at end of each Financial Year to assist client for tax filing.
  • Flexible in nature in holding cash depending on market conditions.
What is the minimum investment amount required for investing in PMS?

Depends on the product and the portfolio manager. But in general, the PMS starts with a minimum investment amount of Rs.25 lakhs in cheque or an equivalent valuation security, which generally will be liquidated.

Who will manage my portfolio?

We at RUPEESTOP brings you the best from the products offered by various portfolio managers and post your selection of the product your investment will be managed by Portfolio Managers along with a team of research analysts.

Do PMS invest in Derivatives?

Yes, but only for the purpose of hedging and portfolio rebalancing and not for leveraging.

Do PMS Guarantee Returns?

No, under the regulation of SEBI Portfolio Manager cannot guarantee returns.

What are the charges/Fees?

Depends on the product and the portfolio manager as there is no prescribed scale of fee. The  portfolio managers allows you to opt form fixed fees or variable fees or combination of both, in addition to actual expenses like custodian expenses, audit fee, brokerage on transactions.

How will I get updated on my investments under PMS?

You can access your investment details online anytime and will also receive regular reports on performance and portfolio allocation. You can monitor the portfolio performance via various statements and reports made available to you.

What is the Tax Applicable?

Every transaction in a PMS is independent in nature and will be taxed similar to that of securities held in capital market. Investor should consult his tax consultant for details.

Audited statements will also be provided by the portfolio manager at end of each Financial Year to assist client for tax filing.

What are the risks associated with PMS?

All investments involve a certain amount of risk, which varies depending on the security selected.

But portfolio managers apply due care while selecting a security and so the expertise and knowledge of the portfolio managers convert the risk to calculative risk.

Who can invest in PMS?
  • Resident Individuals
  • HUFs
  • Partnership firm
  • Sole proprietorship firms
  • Body Corporate and Association of persons
  • Limited Company
  • NRI (an NRI have to open a Portfolio Investment Scheme Account in accordance with RBI guidelines)
Can I book my profits?

Most of the PMS schemes allows you to book profits till the time your portfolio‘s value does not fall below the prescribed limit of Rs. 25 Lacs, as per SEBI regulations.

Do I require to open a De-mat account for PMS?

Yes, De-mat account mandatory to invest in PMS.

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