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Portfolio Management Service (PMS)

PMS Fee Structure

Previously we have learned the mechanics behind the process of portfolio management services. However, investing in PMS attracts some fees from the investors. Let us discuss them: 

 

 

Entry load: This fee is charged when an investor enters into PMS. The provider of the portfolio management service can charge an entry load of 3 percent.

 

Management fees: This generally ranges from 1 to 3 percent on a quarterly basis and is charged by the service provider to manage a portfolio.

 

Profit-sharing: This is exclusive to each service provider and is agreed upon between the portfolio management service provider and the investor while making an agreement.

 

However, no upfront fee should be charged by the portfolio manager to the investor. The agreement between the portfolio manager and the investor shall conjointly embrace the manner of fees payable by the investor or client for each service rendered by the portfolio manager.

 

Let's have a look at the fee structure of some of the famous Portfolio Management Services-

  • Porinju Veliyath Equity Intelligence PMS- They charge 2% p.a. as a management fee and 10% p.a. on the  additional performance returns.
  • Kotak PMS- They do not charge any performance fee. 2.5% p.a. is charged as a management fee and an exit load at 3% for one year.
  • Ask PMS- They charge 2% p.a. of the portfolio value. 1.5% of capital invested is charged as a portfolio fee. If the investor earns a profit of 10% or greater on the invested amount, then the 20% of the earned profit needs to be given to Ask PMS by the investor.

There are financial advisors who don't take money in percentage terms but they charge upfront fees in exchange for advice regarding where the funds should be invested. Thereafter, the client has to take charge of the rest of the process of investing.

 

Some of the best advisors include Ashish Kyal of Waves Strategy Advisors, Amit Kukreja of Wealthbeing Advisors, Abhishek Kumar of Sahaj Money.

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Units 9/14