How to Invest in PMS: Steps, Benefits & Minimum Investment

Updated on 13 May, 2025

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India ranked 4th in terms of the number of HNIs, according to a recent report by Knight Frank. With the rising number of wealthy individuals, the investment landscape has also evolved. Many high-net-worth individuals (HNIs) and ultra-high-net-worth individuals (UHNIs) are looking beyond vanilla investment products like mutual funds, bonds, FDs, or direct stock investing. They’re looking for the potential for much higher returns and more control combined with greater customisation.

Portfolio Management Services (PMS) offer exactly that. Customised to the needs of investors, PMS provides professional portfolio execution, personalised asset allocation, and the ability to respond quickly to market shifts. It is regulated by SEBI under the Portfolio Managers Regulations, 2020, ensuring transparency, compliance, and a high degree of accountability.

Let us understand how to invest in PMS, the benefits, and the pms services minimum investment required.

Steps to Invest in PMS

Follow these steps to learn how to invest in PMS.

1. Define Your Investment Goals and Risk Profile

Start by evaluating your financial goals, risk tolerance, liquidity requirements, and investment timeline. This will help you identify which PMS or specific offering aligns best with your needs. Not all PMS providers offer the level of customisation you may require, and some may not adapt their strategy to suit individual goals. While customisation is available, its extent varies depending on the type of PMS.

2. Select a Registered Portfolio Manager

Only entities registered with SEBI are authorised to offer PMS. Verify registration through the SEBI website. Also, each portfolio manager may have a distinct investment style, such as value, growth, or sectoral strategies. Before selecting one, evaluate their regulatory track record, investment approach, and compliance history.

3. Evaluate Fee Structures

SEBI regulations do not specify any fee scale that portfolio managers can charge to their clients. They can charge management fees (1-2%) + performance fees (e.g., 10-20% of profits). Also, SEBI mandates that all fees must be clearly disclosed in the client agreement, ensuring transparency and investor protection.

4. Complete the Onboarding Process & Open Your Account

Once you have chosen the provider, complete the onboarding formalities, including submitting KYC documents, signing agreements, and transferring the minimum required investment. Many PMS providers now offer digital onboarding for enhanced convenience.

5. Monitor and Review Your Portfolio Performance

Active monitoring is essential for optimising potential returns. Review performance reports regularly and stay in touch with your portfolio manager to make timely adjustments when needed. Portfolio managers are required to send detailed reports (at least quarterly) covering portfolio performance, holdings, transactions, and associated fees.

Benefits of Investing in PMS

Investing in PMS offers certain benefits:

1. Professional Portfolio Management

With PMS, you can gain access to experienced fund managers who use data analysis to make investment choices and modify portfolios in response to market changes.

2. High Level of Expertise

Professionals with expertise in stock selection and risk management will help to direct your asset allocation toward investment growth.

3. Personalised and Advanced Investment Strategies

Every investor has unique financial goals. PMS provides specific investment solutions that match investors’ personal preferences and risk tolerance while accommodating their investment time frames. Mutual funds do not typically offer this degree of personalised investment solutions.

4. Diversification

A diversified portfolio can help minimise risk and maximise potential returns. So, PMS managers distribute capital throughout various asset classes, sectors, and geographical areas to enhance performance metrics while reducing market fluctuations.

Minimum Investment Requirements for PMS

SEBI oversees portfolio management services in India. This is done to maintain transparency and safeguard investor protection.

The SEBI requires investors to contribute at least ₹50 lakhs to PMS funds. PMS providers must also consistently update investors on performance reports, details about fees, and risk disclosures.

Tips for Choosing the Right PMS Provider

PMS provides many benefits, yet selecting a suitable PMS provider remains critical. Here are some tips to help make a decision.

1. Verify Regulatory Credentials

Ensure the provider is registered with SEBI as a portfolio manager. Avoid unregistered entities or influencers who pose as PMS providers.

2. Evaluate Performance & Track Record

A PMS provider with extensive experience and an established reputation is better able to handle market fluctuations because of its proven track record. Examine client testimonials and Google reviews before making a decision.

3. Fees

Providers may charge management and performance fees. It is important to grasp all associated costs, including exit fees.

Conclusion

PMS is a customised investment offering that provides professional management, personalised asset allocation, and diversification.

It is a reasonable option for HNIs looking to grow and preserve wealth in a regulated and professional framework. As always, due diligence and regulatory compliance should guide your investment decisions.

FAQs

What does it mean to invest in PMS?

PMS is an investment avenue where a portfolio manager builds and manages a portfolio of securities. Unlike mutual funds, PMS offers a more tailored investment strategy as per investors’ needs.

Can NRIs invest in Portfolio Management Services (PMS) in India?

Yes, NRIs can participate in PMS if they adhere to RBI rules and FEMA guidelines. They need to maintain an NRE or NRO account and provide proper documentation for investment in PMS.

How does taxation work for investments made through PMS?

PMS investors are obliged to pay capital gain tax on their investments. For instance, short-term capital gains (STCG) on equities held for less than a year are taxed at 20%. Long-term capital gains (LTCG) above ₹1.25 lakh are taxed at 12.5%.

Are there any lock-in periods associated with PMS investments?

No, SEBI does not permit mandatory lock-in periods for PMS clients, but portfolio managers may charge exit fees or require advance notice for redemptions, as specified in the client agreement.

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