Portfolio Management Services (PMS)

PMS is a tailor made Professional Service offered to cater to the Investment Objective of niche segment of clients. The clients can be Individuals or Institutional entities with High Net Worth. It is essentially an Equity Investment Solution, wherein the Fund Manager will build a Portfolio of Stocks and manages it with an objective to generate High Returns. The Ownership of Stocks continues in Investors’ own Demat account.

Though there are PMS strategies available in other asset classes like Fixed Income, Bonds, and Structured Products etc, Equity PMS remains the most popular PMS offering. Ever since the Market watchdog, SEBI, tightened regulations in 2010, PMS as an Investment Option has undergone lot of refinement and has found more acceptance with investors.

You can open a PMS account, if you are:

• An Individual
• A Hindu Undivided Families
• An Association of Persons
• A Limited Companies
• An NRI, Overseas Company, Firm, Society or an Overseas Trust (subject to RBI approval)

PMS services are offered by prominent Brokers & Asset Management Companies registered with SEBI. Broadly there are two types of PMS:

• Discretionary PMS: In this PMS, the fund manager makes Investment Decisions on behalf of the client and also executes them. The Portfolio Manager has power of attorney to do so. In simple words, the investor has no say in stock selection.
• Non Discretionary:In this PMS, the fund manager gives stock tips to the client and the decision to execute them remains solely at the discretion of the Investor.

No, In Discretionary Portfolio Management Service, the discretion to invest primarily lies with the portfolio manager. However, at the time of Investing, you can give a list of securities/sectors which you do not want in your portfolio due to reasons like conflict of interest, religious beliefs etc. We can take it to the PMS manager to see if such arrangement can be worked out. Again this is possible if the investment amount is higher.

Successful Equity Investing essentially requires:

• Expertise to create a quality portfolio.
• Skill set to evaluate companies and dedication to manage.
• Ability to withstand volatility
• In-depth knowledge of Sectors, Trends & Market intelligence.
• Decision making ability to Buy/Sell based purely on fundamentals & not sentiments.

PMS’s run a concentrated Portfolio of 20-25 stocks. Each company can be given the required dedicated time and effort and many new opportunities can be looked for which is not possible in case of both Mutual Funds & Direct Equity Portfolio as the number of stocks in their Portfolios are quiet high. Direct equity Investors are often seen disappointed with the performance of their portfolios, as human emotions of greed and fear make them commit errors. On the other hand though Mutual Fund Investors do better than direct equity investors, they trial in performance due to over-diversification. From the past data one can make out that mutual fund returns have trailed PMS returns over longer tenures.

From the above points one can make an observation that a PMS portfolio can generate a higher alpha on the Investment compared to Mutual Funds & Direct Equity Portfolio albeit with a higher bit of risk.

• Professional Management:
• Higher flexibility in managing the Portfolio
• Transparency
• Better access to Information
• High chances of spotting Opportunities at early stages of Investment
• Risk Control
• Continuous Monitoring
• Periodic Reporting

An audit report will be sent to you after the end of financial year mentioning in detail all the Transactions in the given year, Gains both Short Term/Long Term, Expenses, Dividend, Interest Income & Portfolio Commentary.

Note: All PMS’s will have to manage their portfolio within the ambit of guidelines set-in by SEBI. Hence there are strong risk management tools in place.

• No. For Equity PMS, the Tax Liability would be the same as you would be Investing directly. However, you should consult your tax advisor on the same. The Portfolio Manager ideally provides an audited Statement of Accounts at the end of the Financial Year to aid the Investors in assessing his/ her tax liabilities.

• Long Term: Holding period >12 Months
• Short Term: Holding period <12 Months

The Portfolio Management Services is open for all Indian nationals, resident or otherwise. NRIs will have to open a PIS Account as required under RBI guidelines in order to invest in the PMS scheme.

• According to the guidelines given by RBI, an NRI can only trade or Invest in stocks and shares in India through the Secondary Market via a designated account known as Portfolio Investment Scheme (PIS/PINS) account on a repatriation or nonrepatriation basis.
• For any transaction in a secondary market on repatriation basis, you need to have an NRE bank account. On the other hand, if you want to do any transaction on a nonrepatriation basis, you should have an NRO bank account. An NRI can open only one PIS account.
• So, if you have existing shares in your Demat account in India, you are required to get the shares transferred to your PIS account so that if you wish to sell these shares in future, you can do so through the PIS route and then you can close your Demat account.

Yes, you can open a PMS account with a combination of Cash and Stocks. The Initial Portfolio of Securities/ Shares will be re-aligned as per the model portfolio.

Apart from cash, you can also hand over an existing portfolio of stocks, bonds or mutual funds to a Portfolio Manager that could be revamped. However the Portfolio Manager may at his own sole discretion sell the said existing securities in favour of fresh investments.

You can use your current Securities / Shares to make Investment in PMS Account, but these will have to be liquidated or transferred to the PMS account, the total sale value of which should be at least Rs. 25 Lacs.

When you opt for a PMS scheme, a bank account and demat account are separately opened in your name and all Investments are made in your name. Accordingly, any income or dividend coming out of the investment made will also be credited in your bank account and the shares will be held in the demat account in your name.

As per the PMS agreement, the Power of Attorney for operating the bank and demat account will be with the portfolio manager.

Yes, it is possible. We understand that you have Invested your hard-earned money and therefore want all your queries are answered timely. You can anytime request for an appointment/call and we will arrange the same with the fund management team for discussion about portfolio spread and returns or any other query you may have regarding your portfolio.

Yes, you can book your profits anytime you want, provided your portfolio‘s value does not fall below the prescribed limit of Rs. 25 Lacs, as per SEBI regulations.