Where would you invest, there are many options- direct equity (stocks), mutual fund, or debt fund? And one more question which is the most necessary to answer, which investment would be best for you? If you are also stuck with any of these questions, then this article is for you. Here in this article, we will talk about PMS.
PMS or Portfolio Management Service is a professional service managed by professional investors, who would invest your money on behalf of you, or guide you to invest it. All these individuals or firms who manage your portfolio are registered under SEBI, so it’s safe. When you sign up for this service you would get your investor, who would be a well-versed investor, who would be backed by a research team. They would provide you with a personalized plan based on your needs and wants. But the fact is this service is only offered to HNI’s or High Networth individuals, who have an investment corpus of at least 50 lakhs. So for ordinary people, this service isn’t available, but if you have a huge investment corpus, then it’s a worth-it option.
According to SEBI, there is almost ₹20 trillion under such portfolio management services and that’s quite a huge amount around 250 billion dollars, that’s close to 10% of India GDP.
PMS or Portfolio Management Service is a professional service managed by professional investors, who would invest your money on behalf of you, or guide you to invest it. All these individuals or firms who manage your portfolio are registered under SEBI, so it’s safe. When you sign up for this service you would get your investor, who would be a well-versed investor, who would be backed by a research team. They would provide you with a personalized plan based on your needs and wants. But the fact is this service is only offered to HNI’s or High Networth individuals, who have an investment corpus of at least 50 lakhs. So for ordinary people, this service isn’t available, but if you have a huge investment corpus, then it’s a worth-it option.
According to SEBI, there is almost ₹20 trillion under such portfolio management services and that’s quite a huge amount around 250 billion dollars, that’s close to 10% of India GDP.
Types of Portfolio Management Services –
Under PMS, there are two main types of services- Discretionary and Non – Discretionary.
Discretionary service – Under this type of PMS service, the investor decides where and when to invest your money, on behalf of you. If you don’t have much expertise or not enough time to take a look at your investment decisions then It would be a good option for you. Also, It is to your advantage as a similar mutual fund, the person investing your money is highly qualified and has a research team backing them. So your money is surely safe in their hands.
Non- Discretionary service – Under this type of PMS service, the investor just provides you with suggestions about where and when to invest but the final call would be still yours. This can be a good option in case you would like to invest your money yourself. So you just have to take the final decision and the execution will be done by the fund manager.
Discretionary service – Under this type of PMS service, the investor decides where and when to invest your money, on behalf of you. If you don’t have much expertise or not enough time to take a look at your investment decisions then It would be a good option for you. Also, It is to your advantage as a similar mutual fund, the person investing your money is highly qualified and has a research team backing them. So your money is surely safe in their hands.
Non- Discretionary service – Under this type of PMS service, the investor just provides you with suggestions about where and when to invest but the final call would be still yours. This can be a good option in case you would like to invest your money yourself. So you just have to take the final decision and the execution will be done by the fund manager.
Difference between a mutual fund and a Portfolio Management service :
You must be wondering that this service is similar to a mutual fund, both have fund managers and your money is invested by professionals. then why not invest in a mutual fund. Then here is some key point of difference between PMS and mutual funds:
1. Under PMS, you get a personal fund manager who will invest on your behalf. While under Mutual funds you along with many investors have the same fund manager. So under PMS, you would be focused individually.
2. Under PMS, you would get a plan personalized for your needs and wants, while you don’t have this option under mutual funds, you would just have to follow an investment strategy common to all.
3. Also under Mutual Fund, you don’t get an option to choose your allocation of investment or take the final call, but you have options available if you choose PMS.
You must be wondering that this service is similar to a mutual fund, both have fund managers and your money is invested by professionals. then why not invest in a mutual fund. Then here is some key point of difference between PMS and mutual funds:
1. Under PMS, you get a personal fund manager who will invest on your behalf. While under Mutual funds you along with many investors have the same fund manager. So under PMS, you would be focused individually.
2. Under PMS, you would get a plan personalized for your needs and wants, while you don’t have this option under mutual funds, you would just have to follow an investment strategy common to all.
3. Also under Mutual Fund, you don’t get an option to choose your allocation of investment or take the final call, but you have options available if you choose PMS.
Tax under PMS –
Under PMS, you would have to pay tax individually on every investment. Unlike mutual funds where you have to pay funds according to mutual funds rule. You may be liable for long-term gains tax or short-term gain tax, based on your investment.
Conclusion –
In the end, we would conclude that if you have the option of choosing a PMS service, then you should surely go for it, there are many advantages as mentioned above. And also having experts at your service can help you grow your money better. But the fact that it is only available to HNI’s seems unfair, but it is what It is.