Portfolio Management Services

Financial Services


Portfolio management service (PMS) is a type of professional service offered by portfolio managers to their client to help them in managing their money in less time. Portfolio managers manage the stocks, bonds, and mutual funds of clients considering their personal investment goals and risk preferences. In addition to money, the portfolio managers manage the portfolio of stocks, bonds, and mutual funds.

Benefits of Choosing Portfolio Management Services (PMS) Instead of Mutual Funds:

While selecting Portfolio management service (PMS) over mutual funds services it is found that portfolio managers offer some very services which are better than the standardized product services offered by mutual funds managers. Such as:

Asset Allocation: Asset allocation plan offered by Portfolio management service PMS helps in allocating savings of a client in terms of stocks, bonds or equity funds. The plan is tailor made and is designed after the detailed analysis of client's investment goals, saving pattern, and risk taking capacity.

Timing: portfolio managers preserve client's money on time. Portfolio management service PMS help in allocating right amount of money in right type of saving plan at right time. This means, portfolio manager provides their expert advice on when his client should invest his money in equities or bonds and when he should take his money out of a particular saving plan. Portfolio manager analyzes the market and provides his expert advice to the client regarding the amount of cash he should take out at the time of big risk in stock market.

Flexibility: portfolio managers plan saving of his client according to their need and preferences. But sometimes, portfolio managers can invest client's money according to his preference because they know the market very well than his client. It is his client's duty to provide him a level of flexibility so that he can manage the investment with full efficiency and effectiveness.

In comparison to mutual funds, portfolio managers do not need to follow any rigid rules of investing a particular amount of money in a particular mode of investment.

Mutual fund managers need to work according to the regulations set up by financial authorities of their country. Like in India, they have to follow rules set up by SEBI.

Services and Strategies Provided Through Portfolio Management Are:
  • portfolio managers works as a personal relationship manager through whom the client can interact with the fund manager at any time depending on his own preference.
  • To discuss any concerns regarding money or saving, the client can interact with his appointed portfolio manager on monthly basis.
  • The client can discuss on any major changes he want in his asset allocation and investment strategies.
  • Portfolio management service (PMS) handles all type of administrative work like opening a new bank account or dealing with any financial settlement or depository transaction.
  • While choosing online Portfolio management service (PMS), the client receives a User-ID and Password, which helps him in getting online access to his portfolio details and checking his portfolio as frequent as he want.
  • Portfolio management service (PMS) also help in managing tax of his client based on the detailed statement of the transactions found on his portfolio.
Portfolio Management Payment Criteria:

There are types of payment criteria offered by portfolio managers to their client, such as:

  • Fixed-linked management fee.
  • Performance-linked management fee.

In fixed-link management fee the client usually pays between 2-2.5% of the portfolio value calculated on a weighted average method.

In performance-linked management fee the client pays a flat fee ranging between 0.5-1.5% based on the performance of portfolio managers. The profits are calculated on the basis of 'high watermarking' concept. This means, that the fee is paid only on the basis of positive returns on the investment.

In addition to these criteria, the manager also gets around 15-20% of the total profit earned by the client. The portfolio managers can also claim some separate charges gained from brokerage, custodial services, and tax payments.

Value Your Money Before Selecting Portfolio Management Services (PMS):
  • Equity bias: Equity portfolio offered by Portfolio management services helps in adding high value than what a debt portfolio offers. Because of this, many portfolio managers emphasis on equity investments and some offer hybrid products.
  • Large surplus to invest: The client should always choose the portfolio managers after considering his portfolio size and the fee he would charge for managing his portfolio. PMS are recommended to those clients who have large surplus amount of money to invest. Otherwise, the company can also think for cheap options like a financial planner or advisor to construct an asset allocation plan and to manage investment.