In this article
Share
Managing an investment portfolio can be overwhelming for most investors, especially when markets swing and when your goals can change. While mutual funds also offer professional management, Portfolio Management Services (PMS) are designed specifically for high-net-worth individuals (HNIs), considering their minimum investment requirement of ₹50 Lakhs.
Using professional help, PMS helps investors optimise portfolios based on risk tolerance, investment goals, and market opportunities. PMS offers a range of advanced approaches to fulfill different investor needs.
This article covers portfolio management types, PMS categories, and how to choose the right approach to align with your specific wealth goals.
What are the Types of PMS?
Portfolio management entails the strategic selection and supervision of investments to accomplish specific financial objectives. The primary forms of portfolio management are as follows:
1. Based on the investment approach
- Active PMS: Managers actively select securities with the objective of outperforming the market.
- Passive PMS: Managers develop portfolios that replicate specific indices, with an emphasis on long-term growth and minimal trading.
2. Based on control and decision-making
- Discretionary PMS: Managers have the ability to execute strategies without client involvement and have complete autonomy over investment decisions.
- Non-Discretionary PMS: PMS administrators provide guidance, but clients are responsible for authorising and executing transactions.
- Advisory PMS: Managers offer investment recommendations; however, clients are accountable for implementing them.
3. Based on strategy and asset class
- Equity PMS: Emphasises equity and equity-related instruments.
- Debt PMS: Invests in fixed-income securities, including bonds and debentures.
- Hybrid PMS: Hybrid PMS invests in both equity and fixed income instruments to balance growth and stability.
- Multi-Asset PMS: A multi-asset PMS diversifies across a variety of asset classes, including equities, debt, real estate, and commodities.
- Thematic & Sectoral PMS: Emphasises specific sectors or investment themes, such as technology or healthcare.
Approaches of PMS
PMS uses 2 primary approaches to cater to the diverse requirements of investors: Customised and standardised services. Each approach provides unique strategies that are designed to accommodate a variety of financial objectives and preferences.
1. Customised Services
Customised PMS are investing strategies suited to investors’ financial goals, risk tolerance, and preferences. It allows for high customisation, ensuring portfolios reflect goals like capital preservation, income generation and aggressive growth.
Investors in customised PMS have direct communication with their portfolio manager, but any portfolio changes must comply with SEBI regulations and client agreements, and cannot always be made instantaneously. It also allows for asset selection based on alternative asset classes, ethical investments, or sectors.
High-net-worth Individuals and institutions seeking a hands-on, personalised investment strategy that meets their financial goals may profit from a customised PMS.
2. Standardised Services
Standardised PMS follows a preset investment plan to suit investors with different risk-return preferences. Investors can choose market-correlated structured portfolios. These portfolios cater to different investment strategies, including conservative, balanced, and high-growth approaches.
This strategy promotes scalability and efficiency, making it appealing to investors who prefer a simpler procedure. Structured PMS sometimes have lower management fees than bespoke services.
It is best for investors who want a professionally managed investment strategy without constant customisation or portfolio tweaks.
How to choose the right type for your investment needs?
It is not solely about returns when selecting the appropriate Portfolio Management Service (PMS). It is also about guaranteeing that your investment strategy is in accordance with your financial objectives, risk tolerance, and long-term strategic direction. Your investment needs should be met by the appropriate PMS, which matches your investment objectives as a whole.
A PMS that is well-matched enables you to optimise returns while preserving the level of control and involvement that aligns with your preferences. Investment horizon, risk tolerance, and portfolio customisation are among the critical factors that investors must assess in order to identify a PMS that not only aligns with their expectations but also improves their overall wealth strategy.
Finally keep in mind that as per SEBI regulations, Portfolio Management Services in India require a minimum investment of ₹50 lakh, making them exclusive to high-net-worth individuals (HNIs). PMS can only be offered by SEBI-registered Portfolio Managers.
Benefits of understanding different PMS and portfolio management types
1. Improved Decision Making
Better alignment with your financial objectives is facilitated by an understanding of a variety of PMS options.
2. Enhanced investment outcomes
By selecting the appropriate PMS, it is possible to achieve optimal risk management and returns.
3. Better risk management
Comprehending various strategies is instrumental in the development of a portfolio that aligns with one’s risk tolerance.
4. Optimised fee structure
The selection of PMS types is facilitated by an understanding of their cost-effectiveness in relation to the services they provide.
5. Customised investment strategies
Personalised investment plans are facilitated by an understanding of the numerous PMS options.
Conclusion
The PMS approach to wealth growth balances professional management and tailored investment techniques. PMS allows investors to choose active or passive management, discretionary or advisory control, or asset-specific strategies.
Portfolio management systems (PMS) should match your assets with your financial goals, risk tolerance, and involvement choices, not just results. Choosing the right PMS improves risk management, decision-making, and investment efficiency.
To attain long-term financial success, strategic investors should comprehend PMS structures and select the appropriate one.
FAQs
Main categories are active, passive, discretionary, and non-discretionary management.
They differ in terms of the asset classes involved, control over decision-making, and investment approach.
Discretionary PMS may be advantageous for investors who desire professional management without active involvement; however, this is contingent upon the investor’s preferences.
To find a PMS that fits your needs, consider your risk tolerance, investment horizon, and involvement.
Explore PMS Other Links:
Google Play 
App Store 
Show comments