Portfolio Management Services (PMS)

What is PMS?

Portfolio Management Service (PMS) is a professional financial service where experienced managers handle your stock investments with the support of a research team. Managing stock portfolios in a Demat account can be difficult for many investors.

The portfolio manager charges a fee for these services, which is regulated by SEBI. The fee can be fixed, profit-sharing, or a combination of both.

How is PMS different from a Mutual Fund?

While both mutual funds and PMS are diversified investments managed by professionals, there are key differences that make PMS a unique asset class.

1. Investment Approach: Mutual funds pool money from multiple investors and follow a standardized approach. PMS offers personalized portfolio management based on individual investor needs and risk profiles. Investors hold actual shares in their own Demat accounts instead of fund units.
2. Pool Impact: In mutual funds, investors are affected by the actions of other investors in the pool. In PMS, each investor owns individual securities, so their portfolio is not impacted by others.
3. Investor Profile: Mutual funds allow small investments starting from Rs 500. PMS is designed for large investors, with a minimum investment of Rs 50 lakhs.
4. Regulation: Both are regulated by SEBI. Mutual funds follow stricter regulations due to accessibility for all investors, while PMS offers more flexibility for large investors.

Types of PMS

Discretionary Portfolio Management

In this approach, the portfolio manager takes full control of managing your portfolio based on your goals, risk tolerance, and investment horizon.

Non-Discretionary Portfolio Management

The portfolio manager provides investment advice, but the final investment decision is taken by the investor. Execution happens after investor approval.

Who should invest in PMS?

If you're a small or new investor, it's better to start with mutual funds. However, if you have a substantial portfolio and investing experience, you may consider allocating 25% – 30% of your equity exposure to PMS.

For larger investors, it is advisable to choose schemes designed for High Net Worth Individuals (HNIs). The minimum investment required in PMS is Rs 50 lakhs.

How to invest?

There are over 400 SEBI registered PMS providers, each offering multiple strategies. This makes selection difficult. At Goalstox, we can help you choose the right scheme that fits your goals and risk profile.