Portfolio Management Services / PMS – Benefits, Charges, Strategies & more

Portfolio Management Servics or PMS is one of the most Advanced form of Investments available for HNI or High Networth Clients or NRI clients.

In this article, we will go through in detail about Portfolio Management Services, its benefits, disadvantages, strategies, types of PMS, role of fund managers & more.


What is PMS or Portfolio Management Service?

Portfolio management service is the science and art of creating investment decisions. Certainly, it helps to set an objective regarding the investment, allocate assets of an individual and manage risk against the portfolio performance.

Portfolio ManagementPortfolio management service is one of the widely known investment services. Most of the stockbroking companies and investment consultancies offer PMS service with minute alterations.

PMS ( portfolio management service) is a kind of 360° investment service for the investors. The PMS service usually assists investors during each level of investing and ensures robust returns as well.

This service is about figuring strengths, weakness, opportunities as well as threats in the basic alternative of debt versus equity, growth versus safety, domestic versus international and various another kind of deals came across in the attempt of maximizing healthy returns at a provided lust for risk.


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Benefits of PMS or Portfolio Management Services

Portfolio management is tactfully managing the investment portfolio by choosing the good assortment of investment alternatives in the right segment and frequently shifting those options in the investment portfolio.

It is just like cooking the best food for your hunger in order to raise the profit level on investment as well as to maximize wealth.

Following are the advantages of portfolio management service-

Make the right investment options

Very frequently, people gather assets and make investments in a casual and improvised manner.

An investment portfolio provides you a comprehensive glance of the assets and also allows individuals to know the spaces available in the particular investment plan in regards to the financial goals.

Portfolio management service (PMS) allows users to make clear and wise decisions regarding the investment portfolio.

Track Performance

Integrating all the investments in a single portfolio empowers users to track the performance of an investment portfolio or assets.

For instance- if you find out that any of your investments is not providing robust returns than you can sell that particular asset and reinvest in a highly profitable business.

With PMS, you can also re-adjust the assets which are based on life objectives.

Invest in a disciplined and regular manner

The main aim of Portfolio management is to boost up and enhance the level of your profit returns. Making investments very often can provide you a healthy and strong return.

For instance- if you have sufficient or small amount of funds and you want to make investments every month, then you can begin with a systematic investment plan (SIP).

Manage Your Liquidity

It is no doubt that the requirement for funds can arise anytime.

So, portfolio management is one of the best investment services which allows users to plan their investment in such a way that they can sell off some amount of funds when they are in need.

Balance Risk & Reward

It is known that not all types of assets are equally created. Some are made with safety and some with risk. But sometimes the funds invested with risk brings healthy returns and safer investment brings low returns.

PMS enables users to maintain a balance between several investments on the basis of your requirements.

Improve your financial understanding

It is one of the best benefits that you will get to know about how the stock market or investment market actually works.

Even if you choose to have discretionary PMS (where assets are managed by the fund manager) type.

Dealing with a fund manager can enable you to enhance your knowledge about diverse investments as well as their interactions.


Disadvantages of Portfolio Management Services or PMS

With impressive benefits, the portfolio management service (PMS) have certain drawbacks which are discussed below-

  • The classification of various products and services of the individual asset management company is quite hard as within a company having different products.
  • Historical finance data is typically used to forecasts the portfolio returns, sometimes the data is not complete and inaccurate as well which normally leads to defective forecast.

List of Companies providing PMS service

Find below the list of top companies providing Portfolio Management Services:

ICICI Pru PMS Aditya Birla PMS Alchemy PMS
IIFL PMS Motilal Oswal PMS Porinju Veliyath PMS
Ask PMS Kotak PMS Edelweiss PMS
Angel Broking PMS Axis PMS DHFL Pramerica PMS
Asit C Mehta Investment PMS Indianivesh PMS NJ Wealth PMS
HDFC PMS IDFC PMS Karvy PMS
Pelican PMS Centrum PMS LIC PMS
Nine Rivers Capital PMS Systematix PMS Marathon Trends PMS
Prabhudas Lilladher PMS Narnolia PMS Accuracap PMS
Alfaccurate Advisors PMS Marcellus PMS Emkay Investment PMS
Tamohara Investment PMS Unifi Capital PMS 2Point2 Capital PMS
SBI Funds PMS Sundaram PMS SATCO PMS
Credent Asset PMS Reliance PMS Invesco PMS
Ambit Capital PMS

How to Invest in PMS or Portfolio Management Services?

Individuals usually think to invest in portfolio management service for getting exponential growth to their funds, revenues or earnings. If you are looking forward to exponential growth then investing in PMS can be the best idea.

Important point to remember that to invent in PMS, an investor needs to invest minimum Rs.25 lakhs, this is the minimum threshold.

There are normally two ways to invest in portfolio management services given below-

  • An investor can invest in PMS through cheque. Once the cheque is handed to the fund manager or investment manager and the cash value is received through the cheque then he starts the process of investment on his/her behalf.
  • The investment in PMS can also be done by directly transferring current shares held by the investor to the PMS account. The amount of transferred portfolio needs to be above the minimum investment criteria. Normally, the customer must have a minimum amount of Rs. 25 lakhs in order to invest in PMS.

Apart from this, the investor will require to sign some documents including- Power of Attorney agreement, PMS agreement with the service provider, the fresh format of the demat account opening and some other documents like identity proof, age proof, PAN card are necessary.


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What are the various types of PMS?

Following are the types of portfolio management services often used by the investment service providing companies or investment advisories-

Discretionary PMS

In Discretionary Portfolio Management Service, the full power of buying, selling as well as strategizing is managed by the service provider.

The portfolio manager or service provider has the right to make decisions for the investment portfolio of the investor without consulting him/her.

At the same time, individual objectives and time-duration are normally taken into consideration or account, the portfolio manager opts the best strategy which he finds the best for the investment portfolio.

As soon as the cash amount is handed to the portfolio manager by the investor, the investor then requires to trust the manager and also believes that the earnings will raise up.

Non-Discretionary PMS

In a Non-Discretionary portfolio management service, the financial counselor gives direction to the investor regarding the investment portfolio.

He or she basically helps the investor to choose the right way of making an investment. With this, investors can have more leeway as a comparison to other types of PMS services offered.

While merits and demerits of this are clearly defined, it is totally up to the individual to decide the direction by his own.

No matter if you are taking investment decisions by your own or taking help of a portfolio manager, the only thing is required to use a viable strategy that ensures effective output and revenue generation.

The advantage of managing an investment portfolio sensibly is that it usually narrow down the entire confusion while providing sensible investments that actually meet the goals of individuals.

Active Portfolio Management

Active portfolio management normally incorporates the entire quantitative analysis of the investment advisories or companies in order to determine the actual value of stock in terms of its capabilities.

In this type of PMS, the portfolio manager ensures to make better earnings as compared to what stock market edicts. The active managers usually bit stocks when the market value is down and sells when the stock market value raises upwards.

To minimize the risk, the managers choose to modify investments among several investment sectors. The main issue with this type of PMS is that it has an entire dependency on the skills of the manager.

Passive Portfolio Management

Passive portfolio management is completely opposite to active portfolio management. The people who opt for a passive portfolio management trust in the coherent market hypothesis.

The main issue is that the basics of the advisory company will be reflected in the stock price always.

Despite, the passive managers choose to play around with index funds which usually carry low turnover but long-term returns.

The main reason for opting low yield is to battle with the value of management charges while booting profits through the stability.


How are Portfolio Management Service returns gets calculated?

Usually, Portfolio Management Service providing firms do provide a calculator for calculating investment returns.

Like, Motilal Oswal has Compounding Magic calculator which enables users to clearly calculate the lump sum amount gained from making investments.

Calculate Future Value

It assists to calculate the actual sum of value you will receive or gain if you make the investment now at a specific compounded rate for the desired time period.

So for calculating future value, you require to enter the present amount, annual interest rate and a number of years accurately and click on to submit an icon for the results.

Calculate Present Value

This allows users to calculate the money you have invested now in order to achieve the desired amount in a specific time duration.

For this, enter a future value, annual interest rates and no. of years and click submit to calculate present value. This calculator is usually used in calculating the investment returns for prospective investments.

In this way, investment companies provide a calculator for calculating each investment type individually as they provide a calculator for calculating SIP returns, comparing portfolios and more.

To calculate various investments there are various methods.


What are the various types of charges levied by PMS house?

The various types of charges levied by the PMS house are described below-

Entry Load Charges

The schemes of portfolio management service may have an entry load charges of approximately 3%. The entry load charges are normally levied while buying PMS.

Management Fees

Every PMS scheme imposes fund management fees from the investors. Fund management fees or commission fees normally charged between the range of 1% – 3% depends entirely upon the PMS service provider.

It is normally levied on a quarterly basis from the PMS account.

Profit Sharing % Charges

Some of the portfolio management service schemes have profit sharing array with commission or management charges where the service provider levy a definite value of profit/ fees over the actual return on the investment.

The commission levied is different on each PMS scheme and for every fund manager as well. If you want to search for any PMS scheme, it would be better for you to check the fees of the particular PMS scheme.

With these charges, the PMS also levy some other charges which are listed below:

  • Audit Charges
  • Custodian Charges
  • Transaction Brokerage Charges
  • Demat Account Opening Charges

Who are PMS Fund Managers & What is their role?

Fund managers usually play a vital role in portfolio management and investment management. They look after the investment portfolios of the investors.

The key responsibilities of the fund manager are described below-

  • When individuals plan to invest in PMS, it involves constructing a healthy investment portfolio of securities. So, it is the portfolio managers who look after their portfolios once they handover the investment amount to the managers.
  • Fund managers make decisions involving buying and selling based on proper research and analysis.
  • They make transactions to the PMS account of investors.
  • They use definite strategies or approaches to generate effective returns from the investment portfolio.
  • In the end, their duty is to handle and manage the portfolio of clients. They do require to respond to clients when they call to resolve queries related to the fund manager.
  • It is the responsibility of the fund manager to provide flexibility to the customers in investment plans and commission charges.
  • Fund managers use to provide proper training and services regarding the PMS to the clients for their convenience and satisfaction.

How do Portfolio Management Service Fund Managers manage funds?

Normally, PMS fund managers manage funds by implementing various strategies. Fund managers are also known as portfolio managers. Normally, they use discretionary PMS type to manage the portfolio of investors.

They also plan a variety of approaches through which the investments of the clients can be managed and handled easily.

Moreover, they usually form an approach which not only manages funds but also generate robust returns. Fund managers look after the entire portfolio of the clients and the transactions done in their PMS account.


What are the various strategies used by Fund Managers to Invest in PMS?

Portfolio management strategies are normally referred to as approaches which are used to enhance the performance of investments or portfolio. PMS strategies usually assist in generating long-term returns at low risks.

There are basically two PMS strategies for effectively managing the portfolio-

Active Portfolio Management Strategy

Active portfolio management strategy is normally dependent on the style of management and analysis that can generate healthy returns and beat the stock market as well.

It includes more than average values and stresses on taking benefits of stock market inabilities. All this is executed by the managers and analysts who evaluate and analyze the stock market with the presence of inabilities.

The active portfolio management strategy normally involves following styles for the selection of stocks-

  • Top-down Approach
  • Bottom-up Approach

Passive Portfolio Management Strategy

Passive portfolio management strategy is normally dependent on the efficiency of the stock market.

Like- it is known that the market is highly efficient and it is impossible to fight with the market returns with time and robust returns are only obtained by making low-cost investments which are kept for the long time period.

The passive portfolio management strategy usually involves various stock selection styles-

  • Efficient market theory
  • Indexing
  • Patient portfolio
  • Aggressive portfolio
  • Conservative portfolio

Portfolio Management Service Conclusion

Portfolio management is a kind of the management of assets and investments of the clients. The portfolio of clients is usually handled entirely by the fund managers.

Fund managers assist users in providing healthy and strong returns from the investment portfolio.

The above article is the complete guide on portfolio management service, it will acknowledge you on how to make effective investment decisions and more.


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