What is Portfolio Management Services or PMS?
Portfolio Management Services account is an investment portfolio in Stocks, Debt, and fixed income products managed by a professional money manager, that can potentially be tailored to meet specific investment objectives. When you invest in PMS, you own individual securities unlike a mutual fund investor, who owns units of the entire fund. You have the freedom and flexibility to tailor your portfolio to address personal preferences and financial goals. Although portfolio managers may oversee hundreds of portfolios, your account may be unique. As per SEBI guidelines, only those entities who are registered with SEBI for providing PMS services can offer PMS to clients.
PMS is a tailored investment portfolio in fixed income instruments, individual securities, equity, and structured products. It caters to the investment objectives of high-net-worth individuals with a minimum ticket size of Rs. 50 lakhs.
PMS offers professional management of your investments and can be discretionary or non-discretionary. In discretionary, the fund or PMS managers manage your portfolio by tracking the market and keeping your investment requirements in mind. Contrarily, in non-discretionary, investors can make the final decisions.
Here, your portfolio is usually concentrated and your stocks are more likely to generate alpha returns in the long run.
There are broadly two types of PMS
1. Discretionary PMS India – Where the investment is at the discretion of the fund manager & client has no intervention in the investment process.
2. Non-Discretionary PMS – Under this service, the portfolio manager only suggests investment ideas. The choice, as well as the timings of the investment decisions, rest solely with the investor. However, the execution of the trade is done by the portfolio manager.
The client may give a negative list of stocks in a discretionary PMS at the time of opening his account and the Fund Manager would ensure that those stocks are not bought in his portfolio. The majority of PMS providers in India offer Discretionary Services.