Portfolio Management Services


How does PMS work?

It is offered by brokerages and mutual funds registered with Sebi. There are two types of PMS: Discretionary and Non Discretionary.

In discretionary , the fund manager takes investment decisions on behalf of the investor. In non-discretionary , the fund manager suggests investment ideas, while the decision is taken by the client.

Is PMS similar to a mutual fund?

The biggest similarly between PMS (discretionary) and mutual funds is that the manager handles the money on the behalf of the clients. But, the key difference is that investors in MF get units that represent stocks. In a PMS, the investor holds the stock in a demat account owned by him, but the fund manager has the power of attorney to operate it.

Is there a minimum investment amount for PMS?

Investors need to bring in atleast Rs 25 lakh to invest in a PMS. Alternatively , they can give shares worth Rs 25 lakhs to the fund manager.

What is the structure of a PMS scheme? How does an investor monitor them?

When you opt for a PMS scheme, a bank account and demat account are separately opened in the your name and all investments are made in your name only. Accordingly , any income or dividend coming out of the investment made will also be credited in your bank account and the shares will be held in the demat account in your name.

As per the PMS agreement, the Power of Attorney for operating the bank and demat account will be with the portfolio manager.

Most portfolio managers give a username and password which can be used to login into their website and see the portfolio statements. As per market regulator Sebi’s instructions, a portfolio manager is required to furnish performance report to their clients every 6 months.