Who Can Provide Portfolio Management Services?

Portfolio Management Services are financial services used by High Net Worth Individuals (HNIs) wherein they trust the management of their portfolio with a professional portfolio manager.

A Portfolio can be seen as a basket of assets that contains a combination of financial instruments such as currency, mutual funds, ETFs, equity, shares, etc.

The portfolio manager helps in making investment decisions and diversify investments across various financial products.

Diversification of portfolio being the top priority for investors to safeguard against stock market fluctuations.

The clients can avail the PMS services through a stockbroking firm registered with Indian regulatory SEBI or investment management companies. 

Also, read How Does a PMS House Function?

However, an investor should have at least ₹50 Lakhs as the minimum investment in PMS. Read along the article to learn more about who can provide portfolio management services.

PMS Companies

In India, an investor is spoilt for choices when it comes to PMS companies. Since there are many operating in the space, it becomes all the more important to differentiate the PMS service providers.

Diversification of portfolios, risk management, better investment decisions, and investing to meet specific investment goals are some of the PMS features that lure the investors to these financial services.

Well, there are two types of Portfolio Management Companies in India:

1. Stockbrokers – Traders require to have an account with a SEBI registered stockbroker in order to carry out trade on the stock market. 

In addition to helping traders carry out trade, some stockbroker firms also offer PMS services to their clients. The clients usually go for well established stockbroking firms with the task of managing their portfolios on their behalf. 

However, there are some lesser known stockbrokers that offer better PMS products in comparison. Here is the list of some of the stockbrokers who provide PMS services:

• Motilal Oswal PMS
• ICICI PMS
• IIFL PMS

2. Investment Management Company – In addition to stockbrokers, there are many investment management companies that provide PMS services to clients.

These investment management companies backed with all the experience, and expertise of professional portfolio managers provide tailored strategies based upon a client’s investment goals and risk appetite.

In India, Alchemy PMS, ASK PMS, Porinju Veliyath PMS are a few of the consistent names on the list of best PMS providers in the country. 

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Types of Portfolio Management Services

In total, there are 3 types of PMS services which investors can choose depending upon their investment objectives, styles can choose from the following:

1. Discretionary PMS Services – In Discretionary PMS services, all the investment related decisions are taken by the portfolio manager. The investor completely trusts their portfolio with the manager.

The manager decides the financial instruments to invest in, and the time to execute those transactions. 

In other words, the portfolio is managed by a professional portfolio manager on behalf of the investor. 

2. Non-Discretionary PMS Services – In Non-Discretionary PMS Services, the portfolio manager simply makes suggestions in regard to the financial instrument and timing of the investments.

The manager does not hold the power to act on those suggestions without the investor’s nod. The investor makes the choice of whether or not to implement those investment recommendations.

However, if the investor does choose to invest, the investment will be made by the portfolio manager though.

3. PMS Advisory Services – Unlike the types mentioned above, here in the PMS Advisory services the task of a portfolio manager is restricted to simply making investment recommendations. 

The choice and power to act on the recommendations lay with the individual investor. The investor, in this case, simply seeks investment suggestions but invests on their own. 

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Conclusion

Investors choose PMS or Portfolio Management Services to maximize the profit from their portfolio. Investors make portfolio investments across various financial instruments such as mutual funds, stocks, ETFs, etc.

In India, there are many well established PMS companies, while some are stockbrokers and some investment management companies who ensure the highest quality of PMS services.   

The minimum investment amount in most of the cases is as high as Rs 50 Lakhs. Among many reasons behind opting for PMS is the experience and expertise of portfolio managers in handling investments of such a high scale.

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