Best Portfolio Management Services in India 2019 - ArthikDisha (2024)

In my last article onStock Market Basics India-How to Invest in Shares, I have discussed the Indian stock market’s recent growth in terms of market capitalisation. Therefore, this paradigm shift towards one of the fastest growing economy is luring more and more High Net Worth Individuals(HNIs) to invest in India.

So, this has prompted me to write this blog post on What are Portfolio Management Services? Portfolio Management Services meaning. Best Portfolio Management Services in India. List of Portfolio Management Services in India.

⇒Portfolio Management Services Meaning

Portfolio Management Services or PMS is a customized and specialized investment vehicle or solutions for lump sum investments. The investment under PMS is in equities or other securities as decided by the portfolio manager from time to time. The Portfolio Manager is solely responsible for preparing and managing the investments in equity or debts on behalf of the client.

In a portfolio management services pms, a fund manager acts like a head Chef. Yes, this sounds very interesting but very true.

Like a chef, he pours his investment ideas on the table and with the help of ingredients like equity, debts, fixed income securities, he makes an investment mix and finally delivers a finished product in form of a portfolio for his high net worth client.

The fund manager is solely responsible for the investment decisions taken by him and answerable to his client alike a chef in terms of food cooked by him.

A portfolio management service is generally rendered by brokers, banks, an independent investment adviser and an asset management company. Some brokerage charge, commissions or fees are charged in return for rendering this service.

⇒What are Portfolio Management Services?

Portfolio Management Services or pms service is an investment strategy taken by the professional and experienced fund managers on behalf of the clients on receiving certain fees or commissions. However, there is a minimum investment ceiling of 25 Lakh below which one can not avail PMS service.

A PMS includes investment portfolio analysis and portfolio management. A fund manager has to do all the activities like investment planning, risk analysing, formulating asset allocation and finally performance reporting. So, this is just a customised product delivered to the high net worth clients based on his risk profile and financial goals.

In PMS the client has the option or freedom, unlike a mutual fund investor to choose a fund manager. He has virtually nothing to do. These fund managers are professional and have in-depth knowledge of the capital markets and financial products which are best suitable for their clients.

An investor can make a fresh lump sum investments in PMS or transfer his existing investments under PMS. The portfolio manager will then formulate and deploy an investment strategy in compliance with his investment ideology and philosophy. Thereafter, he would continuously monitor the performance of the portfolio and make portfolio rebalancing if needed from time to time.

⇒Types Of Portfolio Management Services In India

There are basically two types of Portfolio Management Services in India i.e. Discretionary and Non-Discretionary.

• Discretionary PMS: Under this PMS the fund manager has the sole discretion for taking any buying, selling or planning decisions. He is not supposed to ask the investor before every transaction he executes. This service is the most popular one in India.
• Non-Discretionary PMS: Under this PMS the investor has the sole authority for taking any crucial decision for his portfolio. The fund manager being, so much qualified and experienced has to wait for the final approval of the investor. This PMS does not give the fund manager the required flexibility for taking investment decisions for which he is engaged.

⇒What are the Benefits/Advantages of Portfolio Management Services?

• PMS is a customised wealth management services unlike mutual funds;
• PMS service is delivered by experienced and professional fund managers backed by a sound research team;
• PMS manager has the flexibility of making the investment as per his own investment ideology;
• Unlike a mutual fund manager, the PMS manager does not have much constraints on taking too much risks;
• Best suitable for High Net worth Individuals (HNIs) who can not deal with equities directly themselves;
• Fulfillment of financial goals is the top most priority along with optimisation of returns;
• The investor is conveyed with each and every transaction that takes place under a PMS arrangement;
• PMS being a highly risky investment solution has the ability or potential to deliver higher returns;
• PMS service is more transparent toward clients regarding its funds’ expense ratio;
• Each investor has to sign a different contract form clearly mentioning the detailed fees structures, commissions and profit sharing information thereon;
• A PMS fund manager, unlike mutual funds, has to work for a win win win situation for his clients;
• A portfolio manager has got more accountability to his clients unlike mutual funds;
• Under PMS the portfolio of the client is monitored, supervised and reviewed very frequently in line with investment objectives.

⇒What are the disadvantages/demerits of Portfolio Management Services?

• Minimum investment value to take PMS services is Rs.25 Lakh which is very much high;
• Suitable for investors with high Net worth only. General investors with less than Rs.25 Lakh are not allowed to take PMS;
• Not suitable for risk-averse investors as it involves intense risk elements;
• PMS is neither cost effective nor tax friendly at all. Due to the optimal return proposition, the portfolio manager has to churn out the portfolio every now and then as per the individual’s risk grade. This attracts Short Term Capital Gain(STCG) very frequently;
• Due to a customised financial product, PMS fees or charges are very high as compared to mutual funds;
• In a PMS, the client is required to open a demat account and register a power of attorney of his portfolio in favour of the portfolio manager. This involves lots of paper work or documentation;
• Returns delivered by a PMS annually is not publicly available and keep it as secret.

⇒Best Portfolio Management Services in India for 2019

Since the PMS is a customised wealth management services for each and every client, the investment pattern is not uniform across the investors. The best investment allocation or mix may not be suitable for you and therefore it should not be generalized. Investment in PMS is best suitable only when the investment is made for long term approach.

Below is the list of best Portfolio Management Services in India for 2019.

• Porinju Veliyath’s Equity Intelligence;
• ICICI Portfolio Management Services;
• Motilal Oswal Nest Trillion Dollar Opportunity Portfolio Management Services;
• Kotak Portfolio Management Services;
• Birla Sun LIfe Portfolio Management Services;
• Ask India Select Portfolio Management Services;

Disclaimer:ArthikDIsha is neither directly or indirectly associated with any financial products, institutions, organisations whatsoever. This article is only for educational purpose and should not be construed as investment advice. Investors must consult with expert financial advisors before taking any investment decision.

You may also like to read the following :

• Best Liquid Funds-5 Best Liquid Funds for 2019
• Top 10 Best SIP Mutual Funds to invest in 2019