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Portfolio Management Services: Reasons Why You Need To Invest By Karvy Wealth
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Portfolio Management Services is a tailor made professional service catered to the investments objective of different investor’s classes. Investment solutions formulated through this management service cater to the niche segment of clients.
Depending on the market condition, portfolio management services provide professional management of portfolios, focusing on the objective of delivering consistent long-term performance while controlling risk.
Features of the portfolio management services in India include the following:
• Mandatory for portfolio managers to register with SEBI
• Minimum amount for investment must be Rs. 5 lakhs with a maximum of Rs 1 crore.
• Partial withdrawal of funds is allowed so long as the portfolio value remains at the value of investment at the given time.
• Additional top ups can be made at any time.
• Tracking mode includes holding cum performance statement
• Mode of payment includes cheque, existing portfolio of stocks or even both.
What can the Portfolio management services offer you?
• Portfolio Management Services offer a tailor made investment portfolio managed by professionals to suit the investment objective of the investor.
• Portfolio customisation can go the level of investing in a single stock. Investing in certain stocks which goes against their religious sentiments or offer a negative view is also permitted.
• Investors who have a demat account and a bank account under their name can invest in the power of attorney in favour of the PMS to manage the funds.
• Through the discretionary portfolio, managers have the power to manage the funds of each client in accordance to the needs of the client. A non-discretionary portfolio is managed as per the client’s directions.
• PMS fee charges are calculated based on the agreement with the client. It can also be based on a fixed amount or a return based fee. It can also include a combination of both.
Who can invest in PMS?
Portfolio management services are best for investors who seek to:
• Invest across asset classes such as equity and fixed income amongst many others
• Tailor made investment solutions
• Invest in a long term wealth creation, with the knowledge of the risks associated with investing in PMS.
What does a successful investment in portfolio management services in India require?
In order to invest successfully, it would require:
• Knowledge and exceptional skill set to generate above average returns
• Dedication to create portfolio of multiple companies
• Gain in-depth sector knowledge in order to gauge behavioural attributes.
• Gain access to market intelligence or channel checks to track trends
• Focus on dispassionate decision making, i.e. making a decision based on practical fundamentality.
The PMS portfolio comprises of a concentrated portfolio, consisting of over 20 to 25 stocks. Each portfolio can be given a required amount of dedication and time, along with seeking out new opportunities. With the right investment strategy and portfolio, you can get better and higher returns over direct equity investments and even indirect equities such as MFs & Indices over longer tenures.
How Profitable can be Direct Equity Investment?
Compared to any other asset class, direct equity investment has high risks. With the right skills and market conditions, the risks of direct market can be taken into consideration, to open doors for higher returns. Through long term direct equity investments, you can outperform other asset class. However, the awareness of value stocks and timing the market is crucial in this case.
Will the tax liability be significantly higher?
The tax liability will be calculated in par with that of an individual investor with direct access to the capital market.
The gains will be classified as following:
• Income Head : Business income/ Capital gains
• Holding Period:
o Long Term (holding period >12 Months)
o Short Term (holding period
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