PMS Investment In India: What Portfolio Management Services Offer And How They Work

This service is commonly chosen by high-net-worth individuals (HNIs), but it’s not limited to them. Many partnership firms, Non-Resident Indians (NRIs), Hindu Undivided Families (HUFs), and sole proprietors in India also opt for project management services. The idea is simple—hand over your investments to experts while keeping them in your name.

The Securities and Exchange Board of India (SEBI) regulates portfolio management services in India. SEBI mandates a minimum ticket size of Rs50 lakh for investing in these services. This approach offers a more direct and focused investment strategy than traditional options. SEBI also collects monthly reports from portfolio managers to monitor all operations.

The key elements of portfolio management services

When you opt for portfolio management services in India, you build a structured investment portfolio. To keep things aligned and effective, here are a few key elements that are important:

• Diversification: Spreading investments across sectors, asset classes, and instruments helps you to manage risk while aiming for stable returns.
• Asset allocation: Your money is divided between equities, debt, and other options based on your risk tolerance, liquidity needs, and financial goals.
• Rebalancing: Market movements often shift the original asset mix. Portfolio managers make adjustments from time to time to tailor the investment portfolio based on your preferences, rather than a one-size-fits-all approach.
• Transparency: You have direct access to holdings, providing better visibility into your investment portfolio’s performance. You can closely monitor them and make informed decisions based on current market conditions.

Types of portfolio management services in India

Portfolio management services in India are offered in various formats depending on how involved you want to be and what suits your investment style.

1. Active PMS: In the active approach, the portfolio manager makes regular changes based on market trends and diversifies the investment portfolio to maximise profits.
2. Passive PMS: This method tracks the market with fewer changes than active PMS. Managers usually invest in index-based options (like Nifty 50) that follow broader market movements, aiming for long-term growth with lower turnover.
3. Discretionary PMS: The manager takes complete charge of your portfolio. Based on your inputs – like goals, risk comfort, and time – they make all the professional decisions and execute them without checking back with you every time.
4. Non-Discretionary PMS: The manager suggests ideas in this approach, but you have the final say in what gets implemented. You approve each investment move, and the manager acts only after your confirmation.

Some service providers also offer advisory PMS, where you receive professional advice but handle transactions independently.

How does a portfolio management process take place?

The portfolio management process begins with identifying your financial plans, timeline, and the level of financial risk you’re willing to take. This helps the manager to build a clear profile based on your goals.

Next, they run a detailed analysis of market options that align with your investment needs. Based on this, they design a plan that balances growth and safety while sticking to your objectives.

Once your money is invested, its performance is monitored regularly. If certain assets aren’t meeting expectations or the market outlook changes, the portfolio may be adjusted accordingly.

Transparency is key throughout the process. Your provider should keep you informed and help you understand how your investment portfolio is shaping up over time.

But before choosing portfolio management services, keep a few things in mind. PMS usually comes with higher fees than mutual funds. Since investments are exposed to market movements, they’re better suited for long-term goals. Also, take the time to review the provider’s track record, investment style, and overall reputation.

The perks of portfolio management services

The benefits of portfolio management services in India are:

• Customisation and flexibility: Portfolio management services adapt to changing financial goals and market conditions, keeping your investment portfolio aligned with what really matters.
• Risk management: PMS helps reduce the chances of significant losses by investing your money across asset classes, sectors, and instruments.
• Active tracking: PMS monitors market shifts closely and adjusts your investment portfolio when needed, whether by buying, selling, or reallocating based on performance.
• Professional insight: In portfolio management services, the experts make decisions or guide you through research and experience. Portfolio managers analyse data, spot trends, and respond faster than most individual investors could on their own.

While portfolio management services can offer these strategic advantages, you should not overlook risks like market volatility and liquidity issues.