Portfolio Management Service

Portfolio Management Services

PMS or Portfolio Management Service is a professional service where qualified and experienced portfolio managers backed by a research team manage equity portfolios on behalf of clients instead of clients managing it themselves. India being one of the oldest stock market ecosystems, the direct equity investing cult has been prevalent for decades.

There are a large number of investors who own equity portfolios in their demat accounts that they manage based either on their own experiences or with inputs from broking companies and equity advisors. PMS is an investment service offered by a portfolio manager whereby its investors get the flexibility to tailor a portfolio, according to personal preferences and their financial goals.

Portfolio Management Service
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Portfolio Management Service

Types of Portfolio Management Service

Active Portfolio Management

The active portfolio manager aims to make better returns than the overall markets i.e. to generate Alpha. Higher returns would involve higher than normal risk in the strategies and therefore, the portfolio manager tries to downsize the risk by diversifying its investments into various asset classes, sectors and businesses.

Passive Portfolio Management

Exactly opposite to the previous type is the Passive style of portfolio management. Passive management is an investing strategy that tracks a market-weighted index or portfolio. The portfolio manager generally experiments with the Index funds which has a relatively lower turnover and reasonably decent long term returns.

Discretionary Portfolio Management

A discretionary manager is given full flexibility to make decisions for the investor. While the individual goals, risk appetite and time-frame are taken into consideration, the manager adopts the appropriate strategy which he thinks is the best suiting the investment policy statement.

Non-Discretionary Portfolio Management

The non-discretionary manager is more like an advisor than a portfolio manager himself. He advises the investor in which routes are best to take. The risks and rewards are cleared mentioned in the advisory note while the discretion to take action is totally with the investor.

Benefits of Portfolio Management Service

Right Investment Choice

Often, people accumulate assets or make investments in an ad hoc or haphazard manner. A portfolio gives you a holistic view of all your assets and enables you to see the gaps in your investment plan vis a vis your financial objectives.

Track Performance

Consolidating all your investments into one portfolio enables you to track the performance of assets and compare them easily. If a particular investment is not performing as planned, you can sell it and reinvest it in a more profitable way.

Manage your Liquidity

Nobody can predict when the need for funds will arise. Proper portfolio management can help you plan your investments in such a way that some you can easily sell off some assets when you urgently need funds and easily manage the liquidity.

Financial Understanding

One of the benefits of managing your portfolio of investments actively is that you learn how financial markets work. Even if someone else manages your portfolio, just dealing with a professional can improve your knowledge.