The World of Portfolio Management Service (PMS)
During the last market correction one of my client came to me and said why don’t you give me a mutual fund, which tries to beat the market by buying when markets go down and selling when its up. Why is it that MFs are not so aggressive?That’s a genuine concern which lot of investors have and to do so one has to actively manage the portfolio of stock, which happens in a portfolio management service.
What is a Portfolio Management Service?
PMS is a service designed for those customers who due to lack of time or knowledge cannot actively manage their portfolio. The service includes making a portfolio based on the risk appetite, needs, goal, time frame etc and actively managing the portfolio on behalf of the client to reach the specified objective. The investor is constantly informed about the happenings in the portfolio by way of personal interaction and reports. The PMS team will study the economic data, fund/scrip wise performance and research on various data relevant for the performance of the portfolio and implement (Buy,sell,hold) the necessary actions required. This makes the investor free from continuous tracking of the various stocks and funds, which he holds or wanted to hold.
PMS products unlike equity MFs have less number of stocks in the portfolio with low to high turnover ratio and are available for short to long-term investment time frame unlike equity MF that are mainly for the long term. There are also products which adds in a mix of hedge and derivatives strategy to hedge portfolio and optimize returns or give a capital guarantee based on the CPPI (constant product portfolio Insurance), which is a tested principle in European markets.
PMS also gives the flexibility to move the stocks, which you already hold, into the newly made portfolio. It also gives flexibility where in a group of people usually 2-4 can pool in the money and invest into the portfolio.
PMS are of two main types discretionary, where in only the information/recommendation is passed to the investor and the decision has to be taken by the investor and non discretionary wherein the fund manager can invest the way he wants it to.
Fees charged vary from 2% per year to more than that. There are also some, which comes with a min lock in period and a min corpus, which varies, from Rs 5 lac to above a crore. The tax implication is same as that of Equity MF but there exists confusion within the department, which will be soon clarified. It’s an ideal product for an aggressive investor who wants to enter into equity stocks and need a professional management with less of his time spent on it.
Keep reading….
What is a Portfolio Management Service?
PMS is a service designed for those customers who due to lack of time or knowledge cannot actively manage their portfolio. The service includes making a portfolio based on the risk appetite, needs, goal, time frame etc and actively managing the portfolio on behalf of the client to reach the specified objective. The investor is constantly informed about the happenings in the portfolio by way of personal interaction and reports. The PMS team will study the economic data, fund/scrip wise performance and research on various data relevant for the performance of the portfolio and implement (Buy,sell,hold) the necessary actions required. This makes the investor free from continuous tracking of the various stocks and funds, which he holds or wanted to hold.
PMS products unlike equity MFs have less number of stocks in the portfolio with low to high turnover ratio and are available for short to long-term investment time frame unlike equity MF that are mainly for the long term. There are also products which adds in a mix of hedge and derivatives strategy to hedge portfolio and optimize returns or give a capital guarantee based on the CPPI (constant product portfolio Insurance), which is a tested principle in European markets.
PMS also gives the flexibility to move the stocks, which you already hold, into the newly made portfolio. It also gives flexibility where in a group of people usually 2-4 can pool in the money and invest into the portfolio.
PMS are of two main types discretionary, where in only the information/recommendation is passed to the investor and the decision has to be taken by the investor and non discretionary wherein the fund manager can invest the way he wants it to.
Fees charged vary from 2% per year to more than that. There are also some, which comes with a min lock in period and a min corpus, which varies, from Rs 5 lac to above a crore. The tax implication is same as that of Equity MF but there exists confusion within the department, which will be soon clarified. It’s an ideal product for an aggressive investor who wants to enter into equity stocks and need a professional management with less of his time spent on it.
Keep reading….
The blog looks good. Technical blogs like this too have good readership. What you should do is visit other blogs on similar topics. And leave comments on them. That will bring visitors to your site.
ReplyDeleteI did not know there were blogs on investments until I came across yr blog. Good one. Wise investments have become really important nowadays to ensure returns as per yr requirement&expectations. Any information on this subject without too much technicality really helps.
ReplyDeleteThanks Shobha,
ReplyDeleteMy aim is to come up with less technical articles which will benefit new or first time investors.
DEar Sir,
ReplyDeleteI have some doubts abt pms earlier now after reading ur views all got clarified. Thank u Sir.
Dear Sir, i have some doubts abt PMS after reading ur views all got clarified, Thank U Sir
ReplyDelete