A Project Report

Titled

A STUDY ON PORTFOLIO MANAGEMENT

SERVICES

Submitted to
Savitribai Phule Pune University

By
Prasanna Rakshe
Student Of
Bachelor in Management Studies

Under the Guidance of

Prof. Devaki Jain

Indsearch Institute of Management Studies &

Research, Pune.
(2021-22)
 Acknowledgement

It gives me great pleasure to submit this project to the University of Pune as a part

of curriculum of my BMS course. I take this opportunity with great pleasure to

present before this project on “PORTFOLIO MANAGEMENT SERVICES”

which is a result of co-operation and hard work. The most pleasant part of any

project is to express the gratitude towards all those who have contributed to the

success of the project.

I would like to thank Prof. Devaki Jain who has been my mentor for this project. It

was only through her excellence assistant and good suggestions that I have been

able to complete this project.

I would like to express my gratitude towards all the faculty members and other

staff members of Indsearch for their kind co-operation and encouragement which

helped me in completion of this project.

Prasanna Rakshe,

Pune.
 1 Abstract 1

2 Introduction 2

3 Objective of PMS 7

4 Research Methodology 8

5 Portfolio Construction 12
Top 3 PMS in
6 India 16

7 Data Analysis 18

8 Findings 24

9 Conclusion 26

10 Bibliography 27
Serial Number Title Page Number
 1.Abstract

Investing in equities requires time, knowledge and constant monitoring of the

market. For those who need an expert to help to manage their investments,

portfolio management service (PMS) comes as an answer. The business of

portfolio management has never been an easy one. Juggling the limited choices at

hand with the twin requirements of adequate safety and sizeable returns is a task

fraught with complexities. Given the unpredictable nature of the market it requires

solid experience and strong research to make the right decision. In the end it boils

down to make the right move in right direction at the right time.

The term portfolio management in a common practice refers to selection of

securities and their continuous shifting in a way that the holder gets maximum

returns at minimum possible risk. Portfolio management services are merchant

banking activities recognized by SEBI and these activities can be rendered by

SEBI authorized portfolio managers or discretionary portfolio managers. A

portfolio manager by the virtue of his knowledge, background and experience

helps his clients to make investment in profitable avenues. A portfolio manager has

to comply with the provisions of the SEBI (portfolio managers) rules and

regulations, 1993. This project also includes the different services rendered by the

portfolio manager.

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 2.Introduction

The field of investment traditionally divided into security analysis and portfolio
management. The heart of security analysis is valuation of financial assets. Value
in turn is the function of risk and return. These two concepts are in the study of
investment. Investment can be defined the commitment of funds to one or more
assets that will be held over for some future time period.

In today fast-growing world many opportunities are available, so in order to move

with changes and grab the best opportunities in the field of investments a
professional fund manager is necessary.

Therefore, in the present scenario the Portfolio Management Services (PMS) is fast
gaining importance as an investment alternative for the High-Net-worth Investors.

Portfolio Management Services (PMS) is an investment portfolio in stocks, fixed

income, debt, cash, structured products and other individual securities, managed by
a professional money manager that can potentially be tailored to meet specific
investment objectives.

When you invest in PMS, you own individual securities unlike a mutual fund
investor, who owns units of the entire fund. You have the freedom and flexibility
to tailor your portfolio to address personal preferences and financial goals.
Although portfolio managers may oversee hundreds of portfolios, your account
may be unique.

Investment Management Solution in PMS can be provided in the following ways:

i. Discretionary

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 ii. Non-Discretionary

iii. Advisory

Discretionary: Under these services, the choice as well as the timings of the
investment decisions rest solely with the Portfolio Manager.

Non-Discretionary: Under these services, the portfolio manager only suggests the
investment ideas. The choice as well as the timings of the investment decisions rest
solely with the Investor.
However the execution of trade is done by the portfolio manager.

Advisory: Under these services, the portfolio manager only suggests the
investment ideas.

The choice as well as the execution of the investment decisions rest solely with the
Investor.

Rule 2, clause (d) of the SEBI (portfolio managers) Rules, 1993 defines the term
“Portfolio” as “total holding of securities belonging to any person”.

As a matter of fact, portfolio is combination of assets the outcomes of which

cannot be defined with certainty new assets could be physical assets, real estates,
land, building, gold etc. or financial assets like stocks, equity, debenture, deposits
etc.

Portfolio management refers to managing efficiently the investment in the

securities held by professional for others.

Merchant banker and the portfolio management with a view to ensure maximum
return by such investment with minimum risk of loss of return on the money
invested in securities held by them for their clients. The aim Portfolio management

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is to achieve the maximum return from a portfolio, which has been delegated to be
managed by manger or financial institution.

There are lots of organization in the market on the lookout for the people like you
who need their portfolios managed for them. They have trained and skilled talent
will work on your money to make it do more for you.

Therefore, if any investors still insist on managing their own portfolio, then ensure
you build discipline into their investment. Work out their strategy and stand by it.

MYTHS ABOUT PMS

There are two most common myths found about Portfolio Management Services
(PMS) which we found among most of the Investors. They are as follows.

Myth No. 1: “PMS and Mutual Fund are Similar as the investment option”

As in the Finance Basket both the PMS and Mutual Fund are used for minimizing
risk and maximize the profit of the Investors. The objectives are similar as in both
the product but they are different from each other in certain aspects. They are as
follows.

Management Side

In PMS, it’s ongoing personalized access to professional money management

services. Whereas, in Mutual fund gives personalize access to money.

Customization

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In PMS, Portfolio can be tailored to address each investor's specific needs.
Whereas in Mutual Fund Portfolio structured to meet the fund's stated investment
objectives.

Ownership

In PMS, Investors directly own the individual securities in their portfolio, allowing
for tax management flexibility, whereas in Mutual Fund Shareholders own shares
of the fund and cannot influence buy and sell decisions or control their exposure to
incurring tax liabilities.

Liquidity

In PMS, managers may hold cash; they are not required to hold cash to meet
redemptions, whereas, Mutual funds generally hold some cash to meet
redemptions.

Minimums

PMS generally gives higher minimum investments than mutual funds. Generally,
minimum ranges from: Rs. 1 Crore + for Equity Options Rs. 5 Crore + for Fixed
Income Options Rs. 20 Lacs + for Structured Products, whereas in Mutual Fund
Provide ongoing, personalized access to professional money management services.

Flexibility

PMS is generally more flexible than mutual funds. The Portfolio Manager may
move to 100% cash if it required. The Portfolio Manager may take his own time in
building up the portfolio. The Portfolio Manager can also manage a portfolio with
disproportionate allocation to select compelling opportunities whereas, in Mutual
Fund comparatively less flexible.

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 Myth No. 2: “PMS is more Risk free than other Financial Instrument”

In Financial Market Risk factor is common in all the financial products, but yes, it
is true that Risk Factor vary from each other due to its nature. All investments
involve a certain amount of risk, including the possible erosion of the principal
amount invested, which varies depending on the security selected. For example,
investments in small and mid-sized companies tend to involve more risk than
investments in larger companies.

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 3.OBJECTIVE OF THE PROJECT
Each research study has its own specific purpose. It is like to discover to Question

through the application of scientific procedure. But the main aim of our research to

find out the truth that is hidden and which has not been discovered as yet. Our

research study has two objectives: -

OBJECTIVES

 To know the concept of Portfolio Management.

 To know about the need of PMS and its benefits.

 To know how wealthy and effective portfolio is built.

 To analyze top 3 PMS in India.

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 4.RESEARCH METHODOLOGY
This report is based on primary as well secondary data, however primary data

collection was given more importance since it is overhearing factor in attitude

studies. One of the most important users of research methodology is that it helps in

identifying the problem, collecting, analyzing the required information data and

providing an alternative solution to the problem. It also helps in collecting the vital

information that is required by the top management to assist them for the better

decision making both day to day decision and critical ones.

SOURCES OF DATA

 Primary data: is collected through questionnaire, using google form.

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  Secondary data: Published materials such as periodicals, journals,

newspapers, and various websites.

PORTFOLIO MANGEMNT SERVICES (PMS)

Portfolio (finance) means a collection of investments held by an institution or a

private individual. Holding a portfolio is often part of an investment and risk-
limiting strategy called diversification. By owning several assets, certain types of
risk (in particular specific risk) can be reduced. There are also portfolios which are
aimed at taking high risks – these are called concentrated portfolios.

Investment management is the professional management of various securities

(shares, bonds etc.) and other assets (e.g., real estate), to meet specified investment
goals for the benefit of the investors. Investors may be institutions (insurance
companies, pension funds, corporations etc.) or private investors (both directly via
investment contracts and more commonly via collective investment schemes e.g.,
mutual funds).

The term asset management is often used to refer to the investment management of
collective investments, whilst the more generic fund management may refer to all
forms of institutional investment as well as investment management for private

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investors. Investment managers who specialize in advisory or discretionary
management on behalf of (normally wealthy) private investors may often refer to
their services as wealth management or portfolio management often within the
context of so-called "private banking".

The provision of 'investment management services' includes elements of financial

analysis, asset selection, stock selection, plan implementation and ongoing
monitoring of investments. Outside of the financial industry, the term "investment
management" is often applied to investments other than financial instruments.
Investments are often meant to include projects, brands, patents and many things
other than stocks and bonds. Even in this case, the term implies that rigorous
financial and economic analysis methods are used.

Need of PMS

As in the current scenario the effectiveness of PMS is required. As the PMS gives
investors periodically review their asset allocation across different assets as the
portfolio can get skewed over a period of time. This can be largely due to
appreciation / depreciation in the value of the investments.

As the financial goals are diverse, the investment choices also need to be different
to meet those needs. No single investment is likely to meet all the needs, so one
should keep some money in bank deposits and / liquid funds to meet any urgent
need for cash and keep the balance in other investment products/ schemes that
would maximize the return and minimize the risk. Investment allocation can also
change depending on one’s risk-return profile.

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Objective of PMS

This are the following objective which is full filled by Portfolio Management
Services.

1. Safety Of Fund: -

The investment should be preserved, not be lost, and should remain in the
returnable position in cash or kind.

2. Marketability: -

The investment made in securities should be marketable that means, the

securities must be listed and traded in stock exchange so as to avoid
difficulty in their encashment.

3. Liquidity: -

The portfolio must consist of such securities, which could be uncashed

without any difficulty or involvement of time to meet urgent need for funds.
Marketability ensures liquidity to the portfolio.

4. Reasonable return: -

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 The investment should earn a reasonable return to upkeep the declining
value of money and be compatible with opportunity cost of the money in
terms of current income in the form of interest or dividend.

5. Appreciation in Capital: -

The money invested in portfolio should grow and result into capital gains.

6. Tax planning: -

Efficient portfolio management is concerned with composite tax planning

covering income tax, capital gain tax, wealth tax and gift tax.

7. Minimize risk: -

Risk avoidance and minimization of risk are important objective of

portfolio management. Portfolio managers achieve these objectives by
effective investment planning and periodical review of market, situation and
economic environment affecting the financial market.

12.PORTFOLIO CONSTRUCTION

The Portfolio Construction of Rational investors wish to maximize the returns on

their funds for a given level of risk. All investments possess varying degrees of

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risk. Returns come in the form of income, such as interest or dividends, or through
growth in capital values (i.e., capital gains).

The portfolio construction process can be broadly characterized as comprising the

following steps:

1. Setting objectives.

The first step in building a portfolio is to determine the main objectives of the fund
given the constraints (i.e., tax and liquidity requirements) that may apply. Each
investor has different objectives, time horizons and attitude towards risk. Pension
funds have long-term obligations and, as a result, invest for the long term. Their
objective may be to maximize total returns in excess of the inflation rate. A charity
might wish to generate the highest level of income whilst maintaining the value of
its capital received from bequests. An individual may have certain liabilities and
wish to match them at a future date. Assessing a client’s risk tolerance can be
difficult. The concepts of efficient portfolios and diversification must also be
considered when setting up the investment objectives.

2. Defining Policy.

Once the objectives have been set, a suitable investment policy must be
established. The standard procedure is for the money manager to ask clients to
select their preferred mix of assets, for example equities and bonds, to provide an
idea of the normal mix desired. Clients are then asked to specify limits or

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maximum and minimum amounts they will allow to be invested in the different
assets available. The main asset classes are cash, equities, gilts/bonds and other
debt instruments, derivatives, property and overseas assets. Alternative
investments, such as private equity, are also growing in popularity, and will be
discussed in a later chapter. Attaining the optimal asset mix over time is one of the
key factors of successful investing.

3. Applying portfolio strategy.

At either end of the portfolio management spectrum of strategies are active and
passive strategies. An active strategy involves predicting trends and changing
expectations about the likely future performance of the various asset classes and
actively dealing in and out of investments to seek a better performance. For
example, if the manager expects interest rates to rise, bond prices are likely to fall
and so bonds should be sold, unless this expectation is already
factored into bond prices. At this stage, the active fund manager should also
determine the style of the portfolio. For example, will the fund invest primarily in
companies with large market capitalizations, in shares of companies expected to
generate high growth rates, or in companies whose valuations are low? A passive
strategy usually involves buying securities to match a preselected market index.
Alternatively, a portfolio can be set up to match the investor’s choice of tailor-
made index. Passive strategies rely on diversification to reduce risk.
Outperformance versus the chosen index is not expected. This strategy requires
minimum input from the portfolio manager. In practice, many active funds are
managed somewhere between the active and passive extremes, the core holdings of
the fund being passively managed and the balance being actively managed.

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4. Asset selections.

Once the strategy is decided, the fund manager must select individual assets in
which to invest. Usually, a systematic procedure known as an investment process
is established, which sets guidelines or criteria for asset selection. Active strategies
require that the fund managers apply analytical skills and judgment for asset
selection in order to identify undervalued assets and to try to generate superior
performance.

5. Performance assessments.

In order to assess the success of the fund manager, the performance of the fund is
periodically measured against a pre-agreed benchmark – perhaps a suitable stock
exchange index or against a group of similar portfolios (peer group comparison).
The portfolio construction process is continuously iterative, reflecting changes
internally and externally. For example, expected movements in exchange rates may
make overseas investment more attractive, leading to changes in asset allocation.
Or, if many large-scale investors simultaneously decide to switch from passive to
more active strategies, pressure will be put on the fund managers to offer more
active funds. Poor performance of a fund may lead to modifications in individual
asset holdings or, as an extreme measure; the manager of the fund may be changed
altogether.

The fact that effective portfolio management allows investors to develop the best
investment plan that matches their income, age and risks taking capability, makes
it so essential.

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With proficient investment portfolio management, investors can reduce their risks
effectively and avail customized solutions against their investment-oriented
problems. It is, thus, one of the inherent parts of undertaking any investment
venture.

6.TOP 3 PMS IN INDIA

1) Porinju Veliyath Equity Intelligence PMS

Incorporated in 2002, the company has grown into one of the highest buzzing PMS
in India with strong value-picking genes. Porinju Veliyath is the founder of Equity
Intelligence and is a stock market expert.
Minimum investment required is Rs 50 Lakhs in Porinju Veliyath EQ PMS.
The approx. returns in the last 5 years are 35% and last 1 year is 47%.
There is no lock-in period for the investments. You can withdraw any time.
There is no entry or exit load in this PMS.
Porinju Veliyath’s Equity Intelligence charges a fixed management fee of 2% per
annum, and additional performance fees of 10% of the returns above 10% per
annum.

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If any investments under this PMS are sold within 1 year, there is tax liability of
15% on profits. If any investment is sold after 1 year, profits received are tax free.
Dividends received in PMS for the stocks are tax free.
NRI’s can invest in this PMS on repatriation or non-repatriation basis.
Porinju’s EQ PMS is considered as one of the best PMS Services in India.

2) Motilal Oswal Next Trillion Dollar Opportunity PMS (NTDO)

 Motilal Oswal is an asset management company that provides PMS also in the
name of Next Trillion Dollar Company (NTD). Its strategy is to deliver superior
returns by investing in small cap and mid cap stocks.
Good for investors who want to invest for medium to long term (3+ years).
This PMS invests in 20-25 stocks.
Minimum investment required is Rs 25 Lakhs in this PMS. You can add minimum
Rs.50,000 as a Top Up (additional investment) in any of your strategy accounts.
The approx. returns in the last 5 years are 32% and last 1 year is 19%.
They charge fixed fees and based on performance of the PMS.
NRI’s can invest in this PMS.
Motilal Oswal NTDO is considered as the 2nd best PMS Services in India which
can be considered by invest in 2020-21.

3) Birla Sun life PMS

Established in 1994, Birla Sun Life Asset Management Company provides
portfolio management services (PMS) with a whole range of investment products.
They mainly target those businesses that are priced less than they ought to be and
showing promise for high yields. There are different types of portfolios that are
categorized according to minimum investment amount, time horizon, and your
goal. The following are the portfolios-

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a) Core equity portfolio – Minimum Rs 50 lakh of investment with a time horizon
of 1 to 3 years.
b) Customized Debt Portfolio – Rs 25 Crores or as per SEBI regulations for a
tenure of 3 months to 3 years.
c) Select Sector Portfolio – Rs 25 Crores or as per SEBI regulations for a tenure of
3 months to 3 years.

7.DATA ANALYSIS

1. Do you know about the Investment Option available?

15%
Yes
No

85%

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Interpretation

As the above table shows the knowledge of Investor out of 50 respondents carried
throughout the Pune Area is only 85%. The remaining 15% take his/her residential
property as an investment. According to law purpose this is not an investment
because of it is not create any profit for the owner. The main problem is that in this
time from year 2020-2021, the recession and the Inflation make the investor think
before investing an even a Rs. 100.So, it also creates the problem for the Investor
to not take interest in Investment option.

2. What is the basic purpose of your investments?

Liquidity

Return

Capital Appreciation

Tax Benefits

Risk Covering

0% 10% 20% 30% 40% 50% 60% 70% 80%

Series 1

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Interpretation
As with the above analysis, it is found 75% people are interested in liquidity,
returns and tax benefits. And remaining 25% are interested in capital appreciations,
risk covering, and others. In the entire respondent it is common that this time
everyone is looking for minimizing the risk and maximizing their profit with the
short time of period.

3. What is the most important factor you consider at the time of

Investment?

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Interpretation

As the above analysis gives the clear idea that most of the Investors considered the
market factor as around 12% for Risk and 23% Return, but most important
common things in all are that they are even ready for taking both Risk and Return
in around 65% investor.

Moreover, the Market is fluctuating now days, so as it also getting improvement.

So, investor is looking for Investment in long term and Short-term.

4. From which option you will get the best returns?

Interpretation
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Most of the respondents say they will get more returns in Share Market. Since
Share Market is said to be the best place to invest to get more returns. The risk in
the investment is also high.
Similarly, the Investor are more Interested in Investing their money in Mutual
Fund Schemes as that is also very important financial product due to its nature of
minimizing risk and maximizing the profit. As the commodities market is doing
well from last few months so Investor also prefer to invest their money in
Commodities Market basically in GOLD nowadays.

Moreover, even who don’t want to take Risk they are looking for investing in
Fixed Deposit for long period of time.

5. “Investing in PMS is far safer than Investing in Mutual Fund”.

Do you agree?

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Interpretation

In the above graphs it’s clear that 24% of respondent out of hundred feel that
investing their money in Mutual Fund Scheme are far safer than Investing in PMS.
this is because of lack of proper information about the Portfolio management
services. As the basis is same for the mutual fund and PMS but the investment
pattern is totally different from each other and which depends upon different risk
factor available in both the Financial Products.

6. How do you manage your Portfolio?

Interpretation
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About 57% of the respondents say they themselves manage their portfolio and 43%
of the respondents say they depends on the security company for portfolio
Management. 43% of the respondents prefer PMS of the company because they
don’t have to keep a close eye on their investment; they get all the information
time to time from their Fund Manager.

8.FINDINGS

1. About 85% Respondents knows about the Investment Option, because

remaining 15% take his /her residential property as Investment, but in actual

it not an investment philosophy carries that all the Investment does not

create any profit for the owner.

2. More than 75% Investors are investing their money for Liquidity, Return

and Tax benefits.

3. At the time of Investment, the Investors basically considered the both Risk

and Return in more percentage around 65%.

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4. As among all Investment Option for Investor the most important area to get

more return is share around 22%after that Mutual Fund and other comes into

existence.

5. More than 76% of Investors feels that PMS is less risky than investing

money in Mutual Funds.

6. As expected, return from the Market more than 48% respondents expect the

rise in Income more than 15%, 32% respondents are expecting between 15-

25% return.

7. As the experience from the Market more than 34% Investor had lose their

money during the concerned year, whereas 20% respondents have got

satisfied return.

8. About 45% respondents do the Trade in the Market with Derivatives Tools

Speculation compare to 24% through Hedging. And the rest 31% trade their

money in Investments.

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 9.CONCLUSION
From the above discussion it is clear that portfolio functioning is based on market

risk, so one can get the help from the professional portfolio manager if required

before investment because applicability of practical knowledge through technical

analysis can help an investor to reduce risk. In other words, security prices are

determined by money manager and home managers, students and strikers, lawyers

and landscapers, the wealthy and the wanting. This breadth of market participants

guarantees an element of unpredictability and excitement. If we were all totally

logical and could separate our emotions from our investment decisions then, the

determination of price based on future earnings would work magnificently. And

since we would all have the same completely logical expectations, price would

only change when quarterly reports or relevant news was released.

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If price is based on investor’s expectations, then knowing what a security should

sell for become less important than knowing what other investors expect it to sell

for.

A casino make money on a roulette wheel, not by knowing what number will come

up next, but by slightly improving their odds with the addition of a “0” and “00”.

Yet many investors buy securities without attempting to control the odds. If we

believe that this dealing is not a “Gambling” we have to start up it with intelligent

way.

10.BIBLIOGRAPHY

Sources:
1. Podcasts

2. The Times of India newspaper

3. MoneyControl.com

4. Economics times

5. The Intelligent Investor – By Benjamin Graham

Google form:

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https://forms.gle/1kPm8Gyj5TnLa9wS8

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