Portfolio Management Services also known as PMS is an investment instrument which is managed by highly qualified professionals and stock market experts with their research team. The investment in PMS is managed as per market scenario; its investment can be made in Equity, Debt and fixed income products which are managed by the professionals. A PMS is basically a product for HNI investors as it required a huge amount to invest. It can be tailored by the managers to meet the objective need of investments. As we know that many individuals holds equities in their portfolio but its little bit difficult to manage them in proper manner. Investing in PMS can help in maximizing returns and minimizing the risk factor. PMS investments are way better than doing own research and manage the securities by each individuals as it is very time taking process. In PMS investment the research team does extensive research while opting a company to invest in.
>>The types of PMS
There are four types of PMS:-
1) Active Portfolio Management:
2) Passive Portfolio Management:
3) Discretionary Portfolio Management:
4) Non-Discretionary Portfolio Management:
Now let’s discuss each of them in brief.
1. Active Portfolio Management: Name itself stating that it uses active management approach to deliver higher return than the market. In this fund the fund manager plays pivotal role as he need to keep close monitoring on the market movements for taking any financial decisions.This type of PMS is suitable for those who wish to take high risk to get higher returns.
2. Passive Portfolio Management: In this portfolio the fund manager does not select the securities actively but unlike active portfolio it is constructed a portfolio which follows the benchmark indexes such as nifty100, nifty500, nifty midcap etc and it does not need more intervention of fund manager. This type of portfolio grows in a passive way by following the benchmark returns.
3. Discretionary Portfolio Management: This is a type of portfolio where the fund manager has total control over the investment and investing decisions on behalf of investor. The investor just need to provide his capital to the fund manager and the rest is taken over by the fund manager himself. In Discretionary portfolio the manager charges more amount as he need to focus more to fulfill the investment need of his client.
4. Non-discretionary Portfolio Management: Non-discretionary Portfolio is the main work of a fund manager is to advise you over investment and investment strategies, but the final decision rely on the investor whether he wants to execute the advise or not. Once the investor agrees on the advisory of his fund manager the he takes suitable action on behalf of the investor.
What is the minimum investment amount required in PMS?
Now we will talk about the minimum ticket size of Portfolio management services. The minimum investment amount has been changed over the period by SEBI. In 1993 the minimum investment required in PMS was Rs. 5 Lakhs, but later it was hiked to Rs. 25 Lakhs, and SEBI once again hiked the ticket size to a minimum investment amount to Rs. 50 Lakhs in November 2019.
>>Advantages of investing in PMS
A. Continuous Monitoring: The PMS investment is managed by highly qualified professional fund managers with thorough knowledge of markets to achieve a consistent long term returns with minimizing the risks.
B. Professional Management: It is very difficult work for an individual to continuously monitor the market to evaluate the volatility and take decisions for his portfolio accordingly. But the fund manager continuously keeps tracking market for changes in PMS to get optimal results for his investor.
C. Transparent Investment: The PMS investments are very transparent as the investor frequently gets the performance reports and statements of balances from the PMS vendor.
D. Tailored product: The PMS is totally a tailor made product which provides customizations according to the need of Investor to achieve their financial goals in prescribed duration.
E. Better Risk management: The investment in a PMS is managed by team of market professional with a dedicated research team who are responsible for making investment strategies as per the need of investor which helps minimizing risks as well as optimizing returns.
Bottom line:
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