PORFOLIO

MANAGEMENT
SERVICE
Who is a Portfolio Manager?
A portfolio manager is a body corporate
who, pursuant to a contract or
arrangement with a client, advises or
directs or undertakes on behalf of the
client (whether as a discretionary portfolio
manager or otherwise), the management
or administration of a portfolio of
securities or the funds of the client.
 What is Portfolio Management
Services (PMS)?

 Portfolio Management Services (PMS), service offered by

the Portfolio Manager, 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.
 What is Portfolio Management
Services (PMS)?
 When you invest in PMS, you own individual securities unlike a
mutual fund investor, who owns units of the 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.
What is the difference between a
discretionary portfolio manager and a non-
discretionary portfolio manager?
 The discretionary portfolio
manager individually and independently
manages the funds of each client in
accordance with the needs of the client.
 The non-discretionary portfolio
manager manages the funds in accordance

with the directions of the client.
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.
 Note: In India majority of Portfolio Managers offer
Discretionary Services.
 What is the procedure of obtaining
registration as a portfolio manager from SEBI?

     
For registration as a portfolio manager, an
applicant is required to pay a non-refundable
application fee of Rs.1,00,000/- by way of demand
draft drawn in favour of ‘Securities and Exchange
Board of India’, payable at Mumbai.
 LATEST RULES
 Markets regulator the Securities and Exchange Board of
India (Sebi) increased minimum investment limit by clients
in a portfolio management service (PMS) to Rs 50 lakh from
Rs 25 lakh earlier.

 Base net worth requirement of portfolio managers has also

been raised to Rs 5 crore from Rs 2 crore.

 The regulator said the portfolio managers now cannot

invest more than 25 per cent of their assets under
management (AUM) in unlisted securities.
What are the benefits of
PMS?

Professional Management:
The service provides professional management of portfolios
with the objective of delivering consistent long-term
performance while controlling risk.
Continuous Monitoring
It is important to recognise that portfolios need to be constantly
monitored and periodic changes made to optimise the results.
Risk Control
A research team responsible for establishing the client's
investment strategy and providing the PMS provider real
time information to support it, backs any firm's portfolio
managers.
What are the benefits of
PMS?

Hassle Free Operation

Portfolio Management Service provider gives the client a
customised service. The company takes care of all the
administrative aspects of the client's portfolio with a
periodic reporting (usually daily) on the overall status of the
portfolio and performance.
Flexibility
The Portfolio Manager has fair amount of flexibility in terms of
holding cash (can go up to 100% also depending on the
market conditions). He can create a reasonable
concentration in the investor portfolios by investing
disproportionate amounts in favour of compelling
opportunities.

What
Transparency
are the benefits of

PMS?
PMS provide comprehensive communications and performance
reporting. Investors will get regular statements and updates from
the firm. Web-enabled access will ensure that client is just a click
away from all information relating to his investment. Your account
statements will give you a complete picture of which individual
securities you hold, as well as the number of shares you own.
 It will also usually provide:
 the current value of the securities you own;
 the cost basis of each security;
 details of account activity (such as purchases, sales and dividends
paid out or reinvested);
 your portfolio's asset allocation;
 your portfolio's performance in comparison to a benchmark;
 market commentary from your Portfolio Manager
What are the benefits of
PMS?

 Customised Advice
 PMS give select clients the benefit of tailor made
investment advice designed to achieve his financial
objectives.
 It can be structured to automatically exclude
investments you may own in another account or
investments you would prefer not to own.
 For example, if you are a long-term employee in a
company and you have acquired concentrated stock
positions over the years and have become over
exposed to few company's stock, a separately
managed account provides you with the ability to
exclude that stock from your portfolio.
Who can invest in PMS?

 Individuals and Non-Individuals such as HUFs,

partnerships firms, sole proprietorship firms and
Body Corporate.
What are the modes through which I can make investments in
PMS?

 Apart from cash, the client can also hand

over an existing portfolio of stocks, bonds
or mutual funds to a Portfolio Manager
that could be revamped to suit his profile.
 However the Portfolio Manager may at his
own sole discretion sell the said existing
securities in favour of fresh investments.
DIFFERENCE BETWEEN PMS AND MUTUAL
FUND
ACCOUNTABILITY PMS managers Not directly
are directly accountable
accountable to
the client, who
can seek
clarifications,
especially in
the
discretionary
portfolio.