Understanding Portfolio Management Services: A Comprehensive Guide

Portfolio Management Services (PMS) are professional services provided by financial institutions or wealth managers to manage investments on behalf of clients. They invest in stocks, fixed income, debt, cash, structured products, and other individual securities, and are managed by professional money manager that can potentially be tailored to meet specific investment objectives. When you invest in PMS, you own individual securities unlike a mutual fund investor, who owns units of the fund. PMS boasts a more concentrated portfolio in contrast to mutual funds, resulting in potentially higher returns but also increased risk.

 

• Types of PMS:

  Portfolio Management Services (PMS) can be broadly categorized into two main types based on the investment strategy and asset allocation:
  
  Discretionary PMS: In discretionary PMS, the portfolio manager has the authority to make investment decisions on behalf of the client without seeking prior approval for each transaction. The portfolio manager has the flexibility to buy or sell securities based on their analysis and market conditions, aiming to achieve the client's investment objectives.
  
  Non-Discretionary PMS: In non-discretionary PMS, the portfolio manager provides investment advice to the client, but the final investment decisions are made by the client. The portfolio manager recommends investment opportunities and strategies based on the client's risk profile and investment objectives, but the client has the discretion to accept or reject the recommendations. The client has the freedom and flexibility to tailor his portfolio to address personal preferences and financial goals.