Portfolio Management Services & Alternative Investments Funds

Portfolio Management Services (PMS) are the services offered by the Portfolio Manager. The investment could be across different assets or ideas. For example, Investment portfolio may comprise of stocks, fixed income, debt, cash, structured products and other individual securities. Portfolio manager will build portfolio on the basis of investment approach and objective. When investor invests in PMS, they own individual securities unlike a mutual fund investor, who owns units of the fund. Investors has the freedom and flexibility to tailor their portfolio to address personal preferences and financial goals. While investing investor show be aware of his Risk, Return and Liquidity appetite.

Following services are offered by Portfolio manager

Discretionary:

Under these services, the choice as well as the timings of the investment decisions rest solely with the Portfolio Manager.In India majority of Portfolio Managers offer Discretionary Services.

Non-Discretionary

Under these services, the portfolio manager only suggests the investment ideas. The choice as well as the timings of the investment decisions rest solely with the Investor. However, the execution of trade is done by the portfolio manager.

Advisory:

Under these services, the portfolio manager only suggests the investment ideas. The choice as well as the execution of the investment decisions rest solely with the Investor.

PMS investors ought to be high net worth who desire long-term wealth creation. Minimum investments allowed by regulatory is Rs.50 lakhs.

Apart from cash, the investor can also hand over an existing portfolio of stocks, bonds or mutual funds to a Portfolio Manager that could be revamped to suit his profile. However, the Portfolio Manager may at his own sole discretion sell the said existing securities in favour of fresh investments.

The tax liability of a PMS investor would remain the same as if the investor is accessing the capital market directly. However, the investor should consult his tax advisor for the same. The Portfolio Manager ideally provides audited statement of accounts at the end of the financial year to aid the investor in assessing their tax liabilities.

Following are the benefits of PMS

Professional Management of portfolios with the objective of delivering consistent long-term performance while controlling risk.

Continuous Monitoring and periodic changes made to optimise the results.

Risk Control is the key responsibility of portfolio managers that is required to establishthe client's investment objective and strategy.

Hassle Free Operation with a periodic reporting on the overall status of the portfolio and performance.

Flexibility in investment either by creating a concentration in portfolio when they see opportunity or holding cash depending on the market conditions.

Transparency on the investment by providing regular reporting, updates and online access to the investor.

Customised Advice to investors who would like to exclude certain investments that they prefer not to own.

PMS investor can be Individuals and Non-Individuals such as HUFs, partnerships firms, sole proprietorship firms and Body Corporate. Investors should understand the risk, return and liquidity factor before investing in any of their investments including PMS investments.