Portfolio Management

Services

Renu Maria Xavier

IIM Trichy
Portfolio Management Services

• Portfolio Management Services (PMS) is a tailor made professional service offered to cater the
investments objective of different investor classes.
• It is the professional management of investments to create welth
• The Investment solutions provided by PMS cater to a niche segment of clients.
• Clients can be individuals or entities with high net worth

https://www.motilaloswalmf.com/knowledge-centre/investment-faqs/portfolio-management-services 2
Eligible Investors in PMS
• Resident Individuals (>18 years)
• Hindu Undivided Families (HUF)
• Body corporate (Private /Public)
• Trust (registered)
• Sole Proprietorship Firm
• Co-Operative Society
• NRIs – subject to RBI approvals
• Partnership firms and other eligible
investors

http://citrusinteractive.in/Upload/634781333524238750_PMS.pdf 3
Documents Required

• PMS Client Registration Form

• Discretionary Portfolio Management Service Agreement
• Power of Attorney by client to PMS (notarized locally)
• Bank Account Opening Form
• Photographs
• Depository Account Opening Form
• Proof of Identity
• Proof of Address
• PAN Card

http://citrusinteractive.in/Upload/634781333524238750_PMS.pdf 4
Benefits of PMS

1. Professional management
2. Continuous monitoring
3. Risk Control
4. Hassle-free operation
5. Flexibility
6. Transparency
7. Customized advise

https://www.iciciprupms.com/faq 5
Risks associated with PMS investments

• Investments in small and mid-sized

companies tend to involve more risk than
investments in larger companies.
• One of the major risks of the product is
that the portfolios are concentrated.
• Limited information is available in public
domain
• Does not carry tax benefits, unlike Mutual
Funds
• Threshold size is > 25L – Inaccessible to
middle class

https://www.livemint.com/money/personal-finance/risk-of-portfolio-management-1556618882753.html
https://www.iciciprupms.com/faq 6
Types of PMS
Discretionary
Under these services, the choice as well
as the timings of the investment decisions
rest solely with the Portfolio Manager.
ideas. The choice as well as
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.
Non-Discretionary
Under these services, the
portfolio manager only
suggests the investment
the timings of the
investment decisions rest
solely with the Investor.
However the execution of
trade is done by the
portfolio manager.
https://www.iciciprupms.com/faq 7
PMS: Growth in the last five years

• Healthy growth rate of 25 per cent+ between FY2013 to FY2018

• Discretionary equity PMS has grown at 41 per cent CAGR in this period. This has resulted in 5.5
times growth in the industry
• FY2019 and FY2020 have been relatively tough for the Industry
• SEBI has not regulated PMS on the lines of regulating Mutual Funds so far.
• The enhancement of regulations on the mutual funds industry, has aided the growth of the
PMS industry.
• By increasing the minimum investment amount, SEBI has ensured that PMS continues to remain
an HNI-specific industry, where investors can make informed choices and the misselling of
financial products is reduced.

https://www.outlookindia.com/outlookmoney/investment/indias-hni-continues-to-invest-faith-in-portfolio-management-serv 8
ices-4195#:~:text=Portfolio%20Management%20Services%2C%20widely%20known,to%20be%20Rs%200.50%20crore).
PMS: Growth Drivers

• Macroeconomic trends impacting demand for investment offerings,

such as:
– Growing household savings: A 30 per cent household savings rate at a GDP size
of $2.5 trillion means $750 billion is being added to the savings pool each year.
– A shift from physical assets to financial assets.

• PMS is a most versatile investment vehicle.

– Attractive to investors, who are seeking differentiated portfolios based on
bottom-up stock picking.
https://economictimes.indiatimes.com/markets/stocks/news/pms-fast-emerging-as-investors-first-choice-for-alpha-gene 9
ration/articleshow/68241883.cms?from=mdr
Conclusion
• 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.
• The offerings are usually ideal for investors: who are looking to invest in asset
classes like equity, fixed income, structured products etc., who desire personalized
investment solutions, who desire long-term wealth creation, and who appreciate a
high level of service.
• There are several benefits and risks associated with PMS
• In the period 2013 – 2018, the PMS industry has grown +25%, but in 2019 – 2020,
the growth has reduced.
• Several macroeconomic trends and the role of the regulator is responsible for the
growth of PMS industry in India
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Thank
You
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