PMS - Portfolio Management System

PMS aims to cater to the investment needs of individuals or entities with high net worth value by providing them with investment solutions.

What is Portfolio Management Service?  

Portfolio Management Service (PMS) is a facility offered by a portfolio manager with the intent to achieve the required rate of return within the desired level of risk. An investment portfolio can be a mix of stocks, fixed income, commodities, real estate, other structured products, and cash. A portfolio manager is a licensed investment professional who specializes in analyzing the investment objectives of the investor and has a vast knowledge of the various instruments in the market. The portfolio manager is better positioned to make informed decisions for investments in securities as opposed to a layman. 

PMS is a customized service offered to High Net-worth Individuals (HNI) clients. The service is tailored as per the investor’s return requirements and the ability and willingness to assume the risk. An Investment Policy Statement (IPS) is drafted by a PMS to understand the financial position and needs of the client. The portfolio manager ensures that the return requirements coincide with the risk profile. Before executing the optimum portfolio, PMS also studies the various constraints such as time horizon, tax applicability, liquidity, and other unique considerations of the client. 

What are the types of Portfolio Management Services?

  1. Active Portfolio Management:

    This form of portfolio management aims at beating the performance of a market index such as Nifty. An active portfolio manager will take different positions than that of the tracking index, actively buy and sell securities as per institutional research to create more returns than the index. However, to generate an excess return, the strategy undertakes a higher level of risk.

  2. Passive Portfolio Management:

    Such a PMS strategy aims to mimic the performance of an index by investing in the same securities with similar weights. This is known as indexing or index investing. The transaction costs, resulting from securities turnover, are low as compared to active management as the portfolio churning is at a minimum. However, incurring transaction costs leads to an overall return being lower than the tracking index. The returns of the portfolio are pegged to the market returns. Therefore, the variance in returns is low.

  3. Discretionary Portfolio Management:

    The portfolio manager is given complete control of the portfolio and is free to adopt any strategy which is suitable to the IPS. Such PMS demand higher involvement for decision making justifying higher fees associated with discretionary portfolio management. This is the best option for clients with limited time and knowledge of investing

  4. Non-discretionary Portfolio Management:

    The PMS will only suggest investment ideas while the investor will be responsible for choosing the recommendation and timing. This employs PMS in an advisory capacity as the final call rests with the investor instead of the portfolio manager. 

The portfolio management process is the means through which the portfolio manager defines the investment objectives of the investor, translates them into achievable goals, allocates assets to achieve those goals, monitor the returns and rebalance the portfolio for any mismatch in the risk and return profile of the portfolio. The 3 steps of the portfolio management process are:
  1. Planning:

    Planning the first step of portfolio management and involves the making of the Investor Policy Statement (IPS). Investor policy statement defines the willingness and the ability to take risk from the investors point of view. It also sets the objectives of the investors in terms of their risk and return keeping in mind the IPS of the individuals.

  2. Execution

    Execution is the second step and involves allocation of the investment corpus to various asset classes and various products within the asset classes to match the risk-return profile stated in the IPS.

  3. Feedback

    In the third and final step of portfolio management, the portfolio manager monitors the performance of the portfolio and makes changes to the assets wherever they are falling short of their expected returns. Rebalancing of the portfolio might be done to achieve better returns or the portfolio might stay as it is if it is performing as per expectation.

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Equity market is a place where stocks and shares of companies are traded. The equities that are traded in an equity market are either over the counter or at stock exchanges.


A commodity market is a marketplace where investors trade several commodities like spices, energy, precious metals, crude oil within a country.


This is a type of marketplace that will fix the exchange rate for the currencies.

Mutual Fund

A type of certified managed combined investment schemes that gathers money from many investors to buy securities.

Health Insurance

A health insurance policy extends coverage against medical expenses incurred owing to accidents, illness or injury.

Life Insurance

Life Insurance insures an individual against the risk of financial loss in case of death. It does not include a savings plan.


When a governmental authority imposes levies on citizens and business organizations


PMS aims to cater to the investment needs of individuals or entities with high net worth value by providing them with investment solutions.


A sum of money borrowed from banks or other financial institutions

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Frequently asked questions.

A Portfolio Management Service (PMS) is a service which provides professional management of investments to create wealth. It aims to cater to the investment needs of individuals or entities with high net worth value by providing them with investment solutions.

A Portfolio Manager is a body corporate, which, pursuant to a contract 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 funds of the client.

  • Advantage of equities as an asset class
  • Solutions customized to needs of HNIs and UHNIs
  • Personalized attention
  • Portfolio Managers take buy / sell decisions on behalf of, but in consultation with a client
  • Portfolio Managers regularly interact with clients to update them on portfolio strategy, performance, and market outlook

The investment solutions provided by PMS cater to a niche segment of clients. The clients can be individuals or institutions with a high net worth.

The offerings are usually ideal for investors who are:

  • Looking to invest in asset classes like equity, fixed income, structured products etc.
  • Desire personalised investment solutions
  • Desire long-term wealth creation
  • Appreciate a high level of service

Yes, NRIs can invest in the PMS through the NRE or NRO accounts. There are some additional compliance/documentation requirements for NRI clients. Our relationship manager will help the NRI client with this documentation.

Portfolio managers should furnish a periodic report every six months to their clients. The
information should include the following things:

  • The composition and the value of the portfolio, description of security, number of deposits, value of each security held in the portfolio, cash balance and the aggregate value of the portfolio as on the date of the report.
  • Transactions are undertaken during the period of the information, including date of
    transaction and details of purchases and sales.
  • Beneficial interest received during that period in respect of interest, dividend, bonus shares, rights shares and debentures.
  • Expenses incurred in managing the portfolio of the client details of risk foreseen by the portfolio manager and the risk relating to the securities recommended for investment or disinvestment.

Yes, all investments involve a certain amount of risks. Also, the risk depends upon the
security invested in. Sometimes, even the principal amount gets eroded.

An ideal PMS investors possess the following qualities:

  • A perfect investor always looks for investing in equity, fixed income, structured products.
    They desire long-term wealth creation choices.
  • They always appreciate the high value of service.
    They love and look for personalized investment solutions.

Portfolio Management Services can be offered by the entities that are registered
with SEBI (Securities Exchange Board Of India). PMS works according to the rules and
regulations set by SEBI.

Simple steps to be followed for investing in PMS:

  • Fill a client registration form.
  • An agreement for a principal-agent relationship that will allow the agent to act on your
  • Create a De-mat and PMS account; for this, you will need Aadhar card/ ID proof/ bank
    statement/address proof/ PAN  card copy.

There is no such Lock-in Period. But it is always advisable to have patience at least for
two to four years for better returns.

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