Why Invest in Portfolio Management Services

Portfolio Management Services (PMS) is an investment portfolio in stocks, fixed income, debt, cash, structured products and other individual securities managed by a professional fund or portfolio manager that can be customised depending on the investor's unique needs, specific objectives, and risk appetite.

Inherently, PMS offers greater flexibility with investors' money and can potentially generate higher returns than traditional investment avenues. There are a variety of investment portfolios, including large-cap, mid-cap, multi-cap, and small-cap, among others, that investors can choose.

Governed by the Securities and Exchanges Board of India (SEBI) regulations, PMS requires an upfront higher minimum investment of INR 50 lakh from the investors. Since the amount is large, this investment portfolio is suitable for money-savvy high net-worth individuals and investors. 

Three Types of Portfolio Management Services

• Discretionary: The portfolio manager has a right to make all financial decisions on behalf of an investor. Considering the individual goals and time frame, the portfolio manager adopts the best strategy to achieve investment objectives. 
• Non-discretionary: The portfolio manager suggests investment ideas suitable to an investor's risk appetite, but the final call rests with the investor. The investor can select stocks or other investment products based on his best judgment while the portfolio manager executes the trade.
• Advisory: The portfolio manager only suggests investment ideas, helping the investor make an informed investment decision. The choice and the execution of the investment decisions rest solely with the investor.

Note: In India, most portfolio managers provide discretionary services.

Benefits of investing in Portfolio Management Services

Backed by a high level of expertise and investment research, PMS offers several benefits. Here are some of the most important ones:

•  Customised Investment Portfolio 

PMS enables investors to achieve a customised portfolio. It allows investors to discuss and decide with the fund managers the securities or stocks to choose or avoid, thus, ensuring the desired portfolio.

•  Diversification of Portfolio

One of the most significant advantages of PMS is that it offers a more significant scope for diversification. As a result, investors have a wider choice of products to invest in, such as real estate trusts, gold ETFs, foreign assets, structured products, and commodities, among others. These not only boost profits but also reduce risks because many of them have a low correlation with equities.

•  Sound Professional Advice 

Investment in PMS connects investors with experienced fund managers who closely monitor investors' portfolios in line with the financial goals. Therefore, PMS has the potential to generate higher returns as compared to traditional investments, backed by robust risk management. 

•  Transparent Fee Structure 

PMS investment comes with a transparent fee structure and provides investors with a detailed list of charges or expenses related to a portfolio. 

• Transparent Data Management

PMS is regulated by SEBI regulations; hence, fund managers are required to provide a continual transparent disclosure of all transactions, fees and portfolios to their clients. Most PMS have websites or apps that help investors track their portfolio's performance and trading and view all information related to investment. 

Who Can Invest in Portfolio Management Services?

Primarily, high net-worth individuals who are risk-aware. 

Portfolio Management Services are designed to cater to various investors, including individuals and non-individuals such as HUFs, partnerships firms, institutional entities, sole proprietorship firms, family businesses, and body corporate.

Professional fund managers guide and closely monitor PMS investments, helping investors in their wealth creation journey. WhiteOak Capital Group offers investment services through various investment options depending on the investor's financial goals and risk appetite.