Portfolio management service – often referred as PMS – can be availed by anyone who can invest a minimum of INR 50 Lakhs. There are two types of portfolio management services: discretionary and non-discretionary portfolio services. In discretionary PMS, portfolio managers take investment decisions on behalf of their clients. Portfolio managers manage funds independently. In non-discretionary PMS, portfolio managers are obliged to consult their clients before making any trade. The final decision is taken by the clients and portfolio managers take care of execution and play an assisting role in decision making. Portfolio managers must be SEBI registered to offer portfolio management services. Stock broking companies, banks, or even individuals registered with SEBI can offer portfolio management services.
There are 1000s of portfolio managers available in India. How do we find the best portfolio management service? What would be the factors to consider if one wants to find out the best available PMS? Let us take a look at it. Key aspects of any portfolio management service are returns, fee structure, entry and exit load, lock-in period, portfolio manager experience, and investment strategy. Let us analyze each of them individually. Towards the end of this article, we will be covering what should be the ideal capital required to invest in PMS.
When should one start investing in PMS
As mentioned earlier, PMS requires a minimum investment of INR 50 Lakhs. Though some PMS products take care of diversification, we recommend investing not more than 25% of your capital in a single PMS product. Hence, we believe, the capital of INR 2 Crores is the ideal amount to start investing in PMS products.