Portfolio Management Services is one of the best option for people with high income and to get huge returns it is better to take the help of professionals who are expert in the field.Every High Net Worth Individuals (HNIs) desire to have above-average returns from their savings can be achieved by takeing Portfolio Management Services instead of investing through a Mutual Funds .
Nowadays many people are getting aware of the portfolio management services, or PMS, offered by various entities registered with the market regulator. Earlier, they also used to offer real estate, unlisted shares and structured products options as well, but now all these have come under the Alternative Investment Fund (AIF) category and are managed according to the market regulator’s separate regulations on AIF. PMS has both equity and debt options.Today Lets discuss about Equity Portfolio Management Services.
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1.EQUITY Portfolio Management Services: There are many customised equity options available, but you should have a large fund (minimum 25 Lakhs) to take the services.PMS are offered by various Banks, Brokerages, Independent investment consultants and Asset management companies.Earlier there were many independent financial consultants who were providing PMS service but were not registered with SEBI and some of them faced accusations of misuse and after that SEBI introduced stringent regulations and also increased the minimum investment limit from Rs 5 lakh to Rs 25 lakh (increased the limit by 5 fold).
2.How the Portfolio Management Services Concept works?
The Client and the portfolio manager enter into an agreement regarding the investment strategy, goals and other details. PMS are offered on discretionary as well as non-discretionary basis. In the discretionary system, the manager takes investment decisions and has the power of attorney to manage the investor’s demat account and in non discretionary, he will give his investment ideas & the client has to decide where to invest.
Both PMS and Mutual funds differ in terms of working, fee, SEBI regulations and risk-reward ratio. While the main aim of PMS is offering customised services to the client. The other major difference is that the frequency of engagement is very high in the PMS whereas in Mutual Funds there is virtually very less or you can say “no interaction” and it is just limited to NAV .For investors who prefer to interact with the portfolio manager then PMS is the best option for them.
3.Holding of Assets : PMS offers complete transparency in money management. In PMS, the investors hold the stocks, whereas in mutual funds they hold units. In PMS, the investor can know which stocks he is holding at any given point in time by logging in to his demat account.
4.FEE STRUCTURE : The investor can negotiate the fee with Portfolio manager, unlike in mutual funds.the normal charges for PMS is like a 1.5% to 2% annual fee and get 15-20% profit beyond a set limit.However investors can still negotiate for a lower fee if the assets to be managed are huge whereas in case of Mutual funds the fees are fixed in percentage terms.
5.ACCOUNTABILITY: In case of Mutual Funds the Fund Managers are not directly accountable to the client but in case of PMS, the managers are directly accountable to the client, who can seek clarifications, especially in case of discretionary portfolio.Since accountability is more in PMS because of which the client also gets to know where the portfolio manager has made money and where he lost it.
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