Portfolio Management Service (PMS)
How Does Portfolio Management Services Company Work?
Though we have discussed the basics of Portfolio management services earlier, have you ever wondered how a PMS company works? Let us have a brief discussion on it.
PMS companies are small companies in terms of the number of employees they have but they focus on the quality aspect, that is, to say, they hire expert fund managers, investment managers who manage portfolios of high net worth individuals. As per SEBI, to avail portfolio management services, the minimum capital required is rupees 50 lakhs. The returns are not guaranteed but a person should look into the history and background of the portfolio management house. Also, one should look for the consistent level of return that can be provided to me by the portfolio management house which can be figured out through its client history.
Portfolio Management services outline their investment strategy in advance so investors can decide if the mandate suits their wants and subsequently invest.
The portfolio management house invests the funds of the individuals in different chunks. They also go in-depth to understand the objective and time horizon of investment by communicating with the investors.
Who requires a Portfolio Management Service?
The following should think about portfolio management:
(i) Investors who plan to invest across different avenues like stocks, bonds, funds, commodities and so on however, don’t possess enough information about the whole process.
(ii) Those who have restricted knowledge about the investment market
(iii) Investors who are unaware of how market forces impact return on investment.
(iv) Investors who do not have enough time to trace their investments or rebalance their investment portfolio.