Portfolio management service is a type of professional service offered by companies or portfolio managers to their client to help them in managing their assets. In addition to money, portfolio managers manage stocks, bonds and mutual funds of clients considering their personal investment goals and risk appetite. Investors who have high risk preference and need to have extreme customization of portfolio may opt for PMS. Otherwise mutual funds will be the safer option.
PMS is meant for people having a portfolio substantially larger than the average investor.
Portfolio management service is strictly for investors having loads of money but not have enough time and expertise to manage the portfolio. You will get a personalized fund manager and can call up to discuss at any time.
Also be ready for violent changes in your asset from 10 lakhs to 17 lakhs or to 5 lakhs within a couple of days. PMS comes with its own problems too.
Eligibility Securities and Exchange Board of India, SEBI stipulates the minimum investment required for a Portfolio Management Service to be Rs. 5 Lakhs.
Large brokerage firms offer PMS starting with a minimum investment limit ranging from Rs. 25 Lakhs to Rs. 1 Crore.
PMS is designed for certain class of investors.
There are different types of payment criteria offered by portfolio managers to client
Fixed linked management fee - Fixed amount will be charged yearly by the company from investors.
Performance linked management fee - Fee payable by the investor depends on the performance of the fund. More people opt for this even though the method of fund management will be almost same. Also the company will charge other fees in different names which will cover their back.