Investors in India who are looking for specialized investment solutions have been increasingly interested in Portfolio Management Services (PMS).
In a constantly changing financial environment, where people want to maximize profits while skilfully controlling risks, PMS provides a methodical approach to wealth management.
Investors who want to successfully diversify their portfolios and meet their financial objectives must comprehend the subtleties of PMS.
What are Portfolio Management Services?
Portfolio Management Services (PMS) are tailored investment management services provided by wealth management companies or expert portfolio managers.
The Securities and Exchange Board of India (SEBI) oversees PMS regulation in India, guaranteeing investor protection and transparency.
When it comes to investments through portfolio management services, the minimum investment amount is Rs. 50 lakh.
A Demat account (short for Dematerialized Account, an account that houses all the securities you possess in digital form) and a separate bank account may be formed in your name once you decide to go with a PMS.
The shares are held in your name in your Demat account, and all investments must be made in your name. Any profits or dividends from the investments are likewise credited to the bank account.
The power of attorney for this bank account and Demat account has been granted to your portfolio manager. On the other hand, you may always visit these accounts to see how your assets are doing.
Types of PMS
Discretionary PMS: It is not necessary for investors to make any financial decisions. The portfolio manager makes all financial decisions and takes all necessary steps
Non- Discretionary PMS: The portfolio manager follows the client's instructions and makes recommendations for potential courses of action
Advisory PMS: Provide investors with guidance and support as they make wise financial decisions. Trading is carried out by the investor
Objectives of Portfolio Management Services
Capital Growth: One of the primary duties of a portfolio manager is capital growth. A portfolio manager is constantly searching for the finest investment opportunity that maximizes the investor's funds.
Diversification of Risk: This keeps the investor's risk-return ratio in check while helping them achieve their objective. This can be investing in multiple asset classes, geographies or sectors - anything to ensure that risk is neutralised to the maximum possible extent.
Tax Planning: When making investments, an investor must consider a number of different tax obligations. Moreover, investors may be able to lower their tax liability by utilizing several tax procedures. Experts handling your portfolio make sure all your investments are compliant with tax laws and can help you avoid taxes when they can.
Rebalancing Portfolio: Rebalancing a portfolio refers to going back to the initial combination of securities when market swings or fluctuations tip the scales in favour of one type of security over another. This process is typically carried out once a year.
For astute Indian investors, Portfolio Management Services (PMS) offer a high-end investing option. Offering individualized investment plans, specialized knowledge, and strong risk management frameworks, PMS providers seek to maximize profits while successfully reducing risks.
It is critical for investors to comprehend the main features and advantages of PMS in order to make well-informed decisions and protect their capital while they traverse the complex financial markets.
PMS can be an effective instrument for accomplishing long-term financial goals and ensuring financial well-being if they are well chosen and closely monitored.
While this is a great primer of knowledge, to know more about how a PMS works and why it might be a good option for you, head over to our website to know more!
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