Is PMS A Good Investment?

The upcoming trends might tell Portfolio Management Services as a viable investment option. But is it? Is PMS a good investment?

Among the huge list of investment options in India, PMS services are often overlooked for one reason or the other. Primarily, the investment tool is associated with High Net Worth Individuals (HNIs). 

The clients approach PMS companies. Have a question about How does a PMS House function?– Usually stockbrokers and investment management companies with the motive of managing portfolios on the behalf of the clients. 

Portfolios are investments made across a stock or a combination of financial instruments such as Derivatives, shares, equity, commodity, etc.

Investors consider a lot before making any investment. Be it the choice of financial instrument, the volume of investment, risk factor, etc. 

Considering the minimum investment in PMS which is a huge Rs 50 Lakh, it is fairly valid to question – Is PMS a good investment?

Also, read Who Can Provide Portfolio Management Services? and PMS Investment Risk

Here in this review, we learn about all the exciting benefits and the risks this investment option has to offer to the clients. 

Portfolio Management Advantages

To gain a better answer to the query at hand we need to evaluate the Portfolio Management benefits with some of the concerns that come along.

Let’s begin with discussing the benefits of PMS

1. Higher Returns – One of the biggest PMS benefits is the prospect of a high return on investments. The portfolios are managed by professional fund managers with years of expertise who ensure to meet the client’s expectations.
2. Autonomy of Portfolio – Investors opting for PMS service enjoy complete autonomy over their portfolio. The investor has complete discretion over the purchase, sale, and timing of the investments. 
3. Investing Regularly – Investors want to make the most on their investments and investing regularly and systematically through PMS can help achieve the feat. Making small investments regularly can multiply profits over time.
4. Right Decisions – Some investors can find managing a portfolio a hard task because of the lack of knowledge or requisite experience. Investing is all about making the right decision, in other words – selecting the right stocks at the right time.
5. Ease in Tracking Investments – Having a diversified portfolio managed by professionals affords an investor ease in keeping a track of all the assets. Investing in multiple assets can sometimes be confusing and therefore some investors choose to combine multiple assets in a single portfolio.

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Disadvantages of Portfolio Management

Likewise, it’s time to discuss the disadvantages of the Portfolio Management Service. We’ve already mentioned one major factor that sounds scary to the ears of an investor, it is the initial minimum investment capital. 

Apart from that, there are some other disadvantages of portfolio management as well that demand an investor’s proper attention. 

The disadvantages of PMS are listed below

1. Minimum Investment Capital – One of the biggest disadvantages of PMS is the huge initial investment amount. An investor can only use the PMS service if the investment capital is at least Rs 50 Lakh. This can prove to be a hindrance for many retail investors.
2. Diversification of Portfolio – Diversification is fine, but sometimes investors can go overboard with the task. Investing across various financial instruments can work in your favour, and can also have a negative impact. Investors can miss out on potential profits from investing in a single stock.

Once you are confident about PMS, then you should know about How Can An Investor Invest In Portfolio Management Services?

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Conclusion

Is PMS a good investment? In short, yes. This is the best thing to invest right now in share market segments. Well, there are many reasons that make this service a fine option. However, the biggest of all is the prospect of making the most out of investments. 

Here, the investors get their portfolio managed by a professional portfolio manager or fund manager with adequate experience to help an investor meet their goals.

An investor who lacks the experience and expertise in investing can choose to subscribe to PMS service. In addition, the investor enjoys complete autonomy over their investments and can transact as per their own discretion. 

There is, however, a catch as always. And, a big one at that. PMS services can only be availed by investors with initial investment capital of at least Rs 50 Lakh. 

This, therefore, becomes a hindrance for many retail investors who can opt for other lesser expensive financial segments. 

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