Portfolio Management Service (PMS) is a specialized form of asset management service offered by financial institutions in India for investing in stocks, bonds, mutual funds, and other securities. It is an investment strategy that involves selecting specific stocks and other securities tailored to meet the individual needs of the investor.
PMS schemes are designed to provide investors with comprehensive portfolio management advice and assistance, including portfolio construction, monitoring, rebalancing, and performance evaluation.
In India, while mutual funds and brokerages offer services to invest in the stock market, PMS offers an exclusive portfolio management service where clients can get tailor-made portfolios designed as per their risk appetite and goals.
What is PMS?
Portfolio Management Service (PMS) is a specialized form of wealth management service offered by financial institutions in India. The service includes selecting appropriate stocks and other securities tailored to meet the individual needs of the investor.
PMS provides comprehensive portfolio management advice and assistance, including portfolio construction, monitoring, rebalancing, and performance evaluation. This helps the investor to maximize returns from his investments in the stock market.
What are the types of PMS schemes?
- Discretionary PMS: In Discretionary PMS, the portfolio manager has the authority to take decisions on behalf of the client and make trades based on his own judgment. All decisions regarding the portfolio are taken by the portfolio manager and the client has no say in the matter.
- Non-Discretionary PMS: In Non-Discretionary PMS, the portfolio manager does not have the authority to make decisions on behalf of the client. All decisions regarding the portfolio are taken by the client and the portfolio manager only provides advice and guidance.
What are the advantages of PMS?
The primary advantage of opting for PMS is that it gives investors access to professional portfolio managers who have expertise in managing investments. These professionals help to design custom portfolios that are in line with the investor’s goals, risk appetite, and other preferences.
Another advantage of PMS is that it allows investors to access high-quality research and analysis which is not available to them through traditional investment options such as mutual funds or equity broking houses. The portfolio managers also provide regular updates on the performance of the portfolio which helps the investor to track his investments better.
PMS also allows investors to access a wide range of products such as stocks, bonds, commodities, derivatives, and foreign exchange. This helps the investor to diversify his investments and reduce the overall risk associated with the portfolio.
How to choose a PMS Provider?
When choosing a PMS provider, there are certain factors that need to be considered. These include the credentials of the portfolio managers, the track record of their past performance, the fees charged for the services, and the reputation of the firm.
The investor should also look into the type of strategies used by the firm and the level of transparency provided by them. The investor should also check if the firm is registered with the Securities and Exchange Board of India (SEBI) and if they are compliant with the regulations laid down by SEBI.
PMS is an attractive investment option for investors who want to access professional advice and make informed decisions about their portfolios. However, it is important to choose the right PMS provider and ensure that the portfolio manager is experienced and qualified. It is also important to keep track of the performance of the portfolio and make necessary changes if required.
