Portfolio Management Services
Portfolio Management Services
PMS stands for Portfolio Management Services. It refers to a service provided by financial institutions or professional portfolio managers where they manage a portfolio of stocks, bonds, or other securities on behalf of an investor. PMS is typically used by high-net-worth individuals (HNWIs) who want a personalized approach to managing their investments.
Key Features of PMS:
Personalized Investment Strategy: PMS offers a tailored investment strategy based on the individual's financial goals, risk tolerance, and investment horizon. The portfolio manager selects and manages a mix of assets to meet these specific needs.
Active Management: Unlike mutual funds, where the portfolio is managed according to a set strategy, PMS involves active management, where the portfolio manager makes frequent decisions about buying or selling assets to optimize returns.
Ownership of Securities: In PMS, the investor holds the securities in their name. This is different from mutual funds, where the investor owns units of the fund.
Transparency: PMS clients receive regular reports and updates on their portfolio, including details of transactions, performance, and holdings.
Higher Minimum Investment: PMS typically requires a higher minimum investment compared to mutual funds, often starting from a few million units of currency, depending on the country.
Fee Structure: The fees for PMS are generally higher than those for mutual funds. They usually include a fixed management fee and may also involve a performance-based fee.
Types of PMS
Discretionary PMS:The portfolio manager has full discretion to make investment decisions without needing the investor's consent for each transaction.
Non-Discretionary PMS:The portfolio manager advises the investor, who then makes the final decision on each transaction.
Advisory PMS:The portfolio manager provides advice, but the investor makes all the decisions and executes the trades.
PMS is ideal for investors looking for a customized investment approach and are willing to pay for professional management to potentially achieve higher returns.