A Comprehensive Guide to Portfolio Management Services in India

Portfolio Management Service (PMS) is a specialised service offered by professional money managers to manage investment portfolios on behalf of clients. In India, Portfolio Management Services are regulated by the Securities and Exchange Board of India (SEBI), the primary regulatory body for the securities market in the country.

Here are the key features of a SEBI-registered Portfolio Management Service in India:

• Registration: SEBI-registered PMS providers have obtained the necessary license from SEBI to offer PMS services to clients. This license ensures the provider’s compliance with the regulatory framework and authorisation to manage investment portfolios for clients.

• Customized Investment Strategy: SEBI-registered PMS providers offer tailored investment strategies based on each client’s investment objectives, risk appetite, and financial goals. These strategies are regularly reviewed to ensure they remain relevant and effective.

• Professional Portfolio Management: SEBI-registered PMS providers employ experienced professionals who manage clients’ investment portfolios. These teams possess deep securities market knowledge and use their expertise to make informed investment decisions.

• Transparency: SEBI mandates that PMS providers disclose all relevant information to clients, including investment strategy, portfolio holdings, fees, and charges. Providers must also periodically report on portfolio performance.

• Minimum Investment: SEBI-registered PMS providers require clients to meet a minimum investment threshold to access their services.

• Risk Management: SEBI-registered PMS providers implement robust risk management frameworks to address securities market investment risks. These providers use various risk management tools, such as diversification, asset allocation, and hedging strategies, to minimize the risk of loss.

In summary, a SEBI-registered PMS provider offers professional, customised portfolio management services while adhering to strict regulatory guidelines, ensuring transparency and reliability for clients. Different types of Portfolio Management Services (PMS) are available in India to cater to clients’ diverse investment needs:

• Discretionary PMS: In this arrangement, the portfolio manager takes full responsibility for making investment decisions, based on the client’s investment objectives and risk tolerance.

• Non-discretionary PMS: Here, the portfolio manager provides investment advice to the client, who makes the final investment decision. Clients have the discretion to accept or reject the portfolio manager’s advice.

• Advisory PMS: Portfolio managers provide investment advice, but clients execute investment decisions themselves. Portfolio managers offer research and investment ideas, leaving the final decision to clients.

• Equity PMS: This type of PMS primarily invests in equity shares of listed companies. The portfolio manager aims for long-term capital appreciation by investing in fundamentally strong companies.

• Debt PMS: In this PMS, the portfolio manager primarily invests in fixed-income securities such as bonds, debentures, and other debt instruments. The goal is to generate regular income for the client while preserving capital.

• Balanced PMS: This PMS invests in a mix of equity and debt instruments to provide a balanced investment portfolio. The portfolio manager aims to generate both capital appreciation and regular income for the client.

• Sectoral PMS: This PMS invests in specific sectors or industries such as technology, healthcare, or real estate, seeking to capitalize on the growth potential of the selected sector.

• Theme-based PMS: In this PMS, the portfolio manager invests in companies following specific themes, such as green energy, digital transformation, or disruptive technologies, aiming for capital appreciation through alignment with the chosen theme.

It’s essential for investors to understand that PMS offerings can vary among investment management companies. Investors should carefully evaluate investment objectives, risks, and fees associated with each PMS type before investing.