Portfolio Management Services (PMS) is a personalized investment service where a professional fund manager manages a portfolio exclusively for an individual client. Unlike mutual funds where investors pool their money, in PMS, the client's money is managed separately.
- How does PMS work?
- Client Onboarding: The client meets with the PMS provider to discuss their financial goals, risk tolerance, and investment horizon.
- Portfolio Creation: The fund manager creates a customized investment portfolio based on the client's profile and preferences.
- Portfolio Management: The fund manager actively monitors the portfolio and makes buy/sell decisions to optimize returns.
- Regular Reporting: The fund manager provides regular updates on the portfolio's performance, including detailed reports and explanations.
- Key Features of PMS:
- Customization: Portfolios are tailored to individual needs and goals.
- Direct Ownership: Clients have direct ownership of the securities in their portfolio.
- Higher Flexibility: More flexibility in investment strategies compared to mutual funds.
- Potential for Higher Returns: Customized approach can lead to better performance.
- Higher Fees: PMS typically involves higher fees than mutual funds.
- Who is PMS Suitable For?
- High-Net-Worth Individuals (HNIs): Individuals with significant wealth who seek personalized investment solutions.
- Sophisticated Investors: Investors with a deep understanding of financial markets and risk management.
- Those Seeking Tax Benefits: PMS can offer certain tax advantages.