A Guide To Portfolio Management Services In India

By Author: sammy Cook
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A Portfolio Management Service Account or PMS is actually a investment portfolio that is managed by a professional finance manager and is often tailored or customized for some specific objectives of investment. A PMS generally deals with stocks, shares and a number of fixed income products and if an individual is looking to invest in PMS he actually own the individual securities that is quite different from the mutual fund investment where the investor actually owns units of the fund. With the Portfolio Management Services an investor have the flexibility and the freedom to customize his portfolio depending upon his personal requirements and financial objectives and in India any organization or entity has to be registered with SEBI to provide PMS services inside the country.
According to SEBI one is required to invest a minimum of 5 Lacs rupees to open a PMS account but basically different service providers have different balance requirements that also depend upon the type of the product too. In India there are two types of Portfolio Management that investors ...
... can avail – the discretionary portfolio management services and non discretionary portfolio management services. In discretionary portfolio management the investment is completely at the discretion of the fund manager and in no way the client can intervene. But in non- discretionary portfolio management both the choice and time of investment is the responsibility of the investor and the responsibility of the portfolio manager is only to suggest investment ideas but still the execution of trade is the responsibility of the portfolio manager.
In India an investor can invest in Portfolio Management Services in two ways – one of the is through check payment and the other method is by transferring existing shares owned by the investor to the PMS account. In both cases the investor is required to sign a PMS agreement along with a few other documents like an agreement for Power of Attorney, documents for opening a new demat or derivative brokering account and a few other mandatory documents like address and Identity proof and the PAN. As per SEBI guidelines non-resident Indians are also eligible for investing in a PMS account but before investing in PMS they are required to open a PIS account and a checklist for required documents is often provided to them by the PMS provider.
The best thing about Institutional broking service account is that every single account is considered as unique and even the portfolio of the accounts also differs from one another. Though Portfolio Management Services include no NAV but the customers receive a daily valuation for their portfolio by the service provider. Every PMS account does have a model portfolio and every investment for an investor is done on the basis of that model portfolio. There are a number of reasons like time of entry of the investor, difference in the invested amount and additional purchases that make the portfolios to differ from one another and PMS charges in India are decided at the time of the investment and generally include Custodian Fee, demat account opening charges, transaction brokerage and audit charges that are vetted by the investors.