Portfolio Management Services (PMS)

Portfolio Management Services account is a sophisticated investment vehicle where the portfolio manager invests in Stocks, Debt and fixed income products and other securities that can potentially be tailored to meet specific investment objectives.

According to SEBI “A portfolio manager is a body corporate who, pursuant to a contract or arrangement with a client, advises or directs or undertakes on behalf of the client (whether as a discretionary portfolio manager or otherwise), the management or administration of a portfolio of securities or the funds of the client.”

The process of Portfolio Management

The idea of the PMS is that you hand over your portfolio to a person who is equipped with knowledge and skills to execute investment decision on your behalf. In keeping with that theory, the portfolio manager has the full control of the portfolio. However, you have access to your portfolio. You can log in to your demat account any time you want and get the real-time information of your holdings. The most important thing that you need to understand is that the demat and trading account is always in your (subscriber) name. Therefore, the account holder is the sole beneficiary of all the profits, losses, dividends, bonus shares and also liable to taxes that the account incurs.

A best portfolio management service helps you in each level of the investment since from constructing your portfolio to evaluate it periodically. Let’s check the process in a detailed manner one by one.

    Product Interested

    Security Analysis

    It is the very first stage of portfolio creation process, which involves examining the risk factors, as well as the expected returns of individual securities and its matchability with the investors risk appetite and financial goals.

    Portfolio Analysis

    After identifying the potential stocks and the respective risk involved, a number of portfolios can be created out of them, which are known as feasible portfolios.

    Portfolio Selection

    Out of all these feasible portfolios, the optimal portfolio, which is best suited for the investors according to his needs and goals, is selected.

    Portfolio Revision

    Once the portfolio is selected, the portfolio manager and the team of research analysts, keep a close eye on the portfolio, to make sure that no opportunity is missed of earning best returns for the investor.

    Portfolio Evaluation

    Here in this stage, the performance of the portfolio is assessed periodically to evaluate the quantitative measurement of the return obtained against the risk involved in the portfolio, for the whole term of the PMS investment. In this phase, if there is a requirement of changes in the portfolio to achieve the specific return expectation the asset allocation is also drifted which in turn helps to achieve the goal within a stipulated period of time.

    Types Of Portfolio Management Services In India

    Discretionary PMS

    In this type, the full authority of buying, selling and strategizing rests with the service provider. There is no obligation whatsoever on the service provider to consult the investor before taking any decision on his/her behalf. Most of the top PMS in India offer discretionary service.

    Non-discretionary PMS

    In this type, the investor has a say in all the portfolio activities. He/she can give suggestions and ideas to the manager. Though this method gives more liberties to the investors, it defies the purpose of PMS as the professional portfolio manager, despite knowledge and aptitude, has to consult the investor before taking crucial calls. Due to these complications, non-discretionary PMS is considered counterproductive.

    Objectives Of The Portfolio Management Service

    While designing the portfolio as per your need the service provider even keeps in mind the objectives to provide you with the best possible returns.

    Capital Growth

    It is the key objective of the portfolio management service. The stock portfolio manager always looks to provide a good growth in terms of returns for your PMS investment.

    Security of Principal Amount Invested

    The portfolio manager always ensures that the principal amount invested initially should always be maintained. That is the value of the investment should not turn lower than the initial amount invested.

    Portfolio Diversification

    It is one of the most important objectives of the portfolio management service. Providing the proper diversification as per the requirement of the investors is one of the most important aspects for any portfolio manager.

    Consistent Returns

    Consistent Returns are also important for any portfolio management service. The consistent performance is the only key to benefit the client as well as satisfy his financial goals within a specific time.







    The following documents are required:

    – PMS Client Registration Form

    – Discretionary Portfolio Management Service Agreement (read disclosure document prior to signing the agreement)

    – Power of Attorney by client to PMS. This document needs to be notarized locally.

    – Bank Account Opening Form

    – Photographs

    – Depository Account Opening Form

    – Proof of Identity

    – Proof of Address

    – PAN Card



    The following are eligible investors:

    – Resident Individuals (>18 years)

    – Hindu Undivided Families (HUF)

    – Body corporate (Private /Public)

    – Trust (registered)

    – Sole Proprietorship Firm

    – Co-Operative Society

    – NRIs – subject to RBI approvals

    – Partnership firms and other eligible investors



    • PMS offers the advantage of customization and concentrated portfolios. This works well in uncertain and volatile markets, where opportunities may be more concentrated. In other words, if you want to invest in or avoid specific stocks or sectors you can’t do that with an equity MF.
    • There is scope of one-on-one interaction with the portfolio manager which increases level of engagement
    • The client has a greater control over his/her portfolio
    • Personalized and professional services

    Transparency with respect to the portfolio is very high. Usually clients are given online access to view their portfolios any time.