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PORTFOLIO MANAGEMENT SCHEMES
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PMS or Portfolio Management Services is a licensed and professional investment service offered to cater to the objectives of niche segment of long-term investors.
The PMS industry in India is regulated by the Securities and Exchange Board of India (SEBI), which sets the guidelines and requirements for PMS providers to operate in the country. SEBI has prescribed a minimum investment corpus of Rs 50 lakh for individuals to be eligible for PMS services.
Portfolio management services (PMS) are offered by specialized financial companies to manage the investment portfolio of high-net-worth individuals (HNIs), UHNIs, NRIs, or institutions.
PMS providers invest on behalf of their clients in a customized portfolio of stocks, bonds, mutual funds, and other securities based on the clients’ investment objectives and risk tolerance. The PMS providers charge a fee for their services, which is typically a percentage of the assets under management (AUM).
PMS providers in India offer various types of portfolio management strategies, including value investing, growth investing, income investing, and quantitative investing, among others. They provide regular updates and performance reports to their clients and aim to achieve superior returns on their clients’ investments while managing risk effectively
Types of Portfolio Management Services (PMS)
1. Discretionary PMS
In this type of PMS, the portfolio manager has full discretion to make investment decisions on behalf of the client. The manager chooses the securities to invest in based on the client’s investment goals, risk appetite, and other factors. The client does not have to approve each investment decision, but they receive regular reports on the portfolio’s performance.
2. Non-Discretionary PMS
In this type of PMS, the portfolio manager makes investment recommendations to the client, but the final decision on which securities to invest in rests with the client. The portfolio manager provides research and analysis to the client to help them make informed investment decisions.
3. Advisory PMS
This type of PMS is similar to non-discretionary PMS, but the portfolio manager only provides investment advice and does not execute trades on behalf of the client. The client makes all investment decisions and executes the trades through their own trading account.