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Portfolio Management Services: Meaning, Types & Companies

Created on 21 Sep 2022

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Updated on 01 Dec 2022

Portfolio Management Services: Meaning, Types & Companies

The stock market is that popular chick in college that everyone wants, but not everyone gets successful with! As Rakesh Jhunjhunwala says, “Markets are like women, always commanding, mysterious and volatile.” And to handle these volatile mistresses, we have portfolio managers, the casanovas.

A portfolio manager looks after your hard-earned money and invests in some instruments that have potentially high returns. Your manager is a licensed professional who specialises in looking into the best investment options available in the market for you. Their knowledge about real estate, stocks, commodities, and other structured products is humongous. A result of years of practice and experience.

They will be the sailors to your funds’ boats. Your portfolio can be a mix of many investment options prevailing in the market. If your net worth is as high as Akshay Kumar's (just kidding), why not have a customised service of the best PMS in India? However, before jumping to the best PMS in India, let's understand whether you need PMS.

What are portfolio management services?

Portfolio Management Services are designed to cater to your needs keeping in mind your return requirements and willingness to take risks. Just imagine a layman looking after your portfolio and promising healthy returns on investments, just like a professional portfolio manager! Scary, right?

A portfolio manager can best handle the tailor-made service as per the guidelines laid by you. They act as a caretaker of your funds. The optimum portfolio for you can only be designed keeping the following constraints in mind:

  • Time horizon
  • Tax Applicability
  • Liquidity
  • Other investor-specific requirements

Do you think Mr Ambani invests all his earnings himself after going through every website or gaining every nugget of knowledge about all the real estate investments? No, he probably has a kitty of portfolio managers who look after his net worth ensuring it’s invested in the most rewarding manner. Having a single person handle the entire trading journey can give better returns than one individual researching while others invest.

You know what? The best part is that you can either have discretionary portfolio management or non-discretionary. Under discretionary management, the fund manager takes investment decisions on behalf of the investor. In contrast, with non-discretionary management, they have to take a pre-approval agreement from the investor for recommended investments. The manager charges a certain fee from the investor and gives access to all the information, research, investments, and operations.

Process of Portfolio Management

The best portfolio management services in India are the ones that make financial planning and investment as simple as opening a social media account. Unfortunately, India experiences severe investor disparity, and as a result,  most females in India don't manage their money independently either. They are still dependent on a man in their lives, whether it is their father, husband or brother. So let us make it simple and reliable, like daal-chawal, not some fancy pizza with unknown toppings. Portfolio management has a three-phase process to go by:

1. Planning: The first and initial step in the process is planning and making the Investment Policy Statement. This step tells us the willingness and risk-taking ability of the investor. It also helps streamline individual investors' objectives in terms of risk and return.

2. Execution: This step involves bifurcating funds into the various asset classes and then investing in the instruments associated with those asset classes based on the risk-return profile mentioned in the IPS.

3. Outcome: The manager monitors how the portfolio is performing and makes adequate changes in the same whenever the outcome (returns) are not as per expectations. If the portfolio's performance goes the expected way, then there is no need to alter it; otherwise, change it to match the expected returns.

Portfolio Management Service vs Mutual Funds

The top PMS in India will ensure you get what you are looking for with an appropriate investment portfolio and get you the best assets in hand with investor-appropriate risk and returns. 

Some of you might find mutual fund investment better than PMS, but I am sure this table will help you understand the exact scenario of both cases.

Features

PMS

Mutual Fund

Customization

High Degree

Comparatively low

Engagement

Higher involvement

Low involvement

Fee structures

Annual Maintenance Fee + share in profit

Fixed Fee + Annual Maintenance Fee

Asset Ownership

Direct ownership of shares to investors

Units in the form of investment

Investment size

₹50 lakhs and above

Any amount

What are the 4 types of Portfolio Management

Following are the different PMS available to the investors:

1. Active: Under this, the manager actively purchases and sells securities to beat the stock market index by buying undervalued securities and selling them at higher prices.

2. Passive: Under this, the manager handles a fixed portfolio. They offer lower returns than active ones but are more profitable and consistent over extended periods.

3. Discretionary: Investors appoint portfolio managers to take financial decisions on their behalf based on the goals laid by the investor and the risk appetite.

4. Non-Discretionary: Under this, the decision lies only with the investor, although the manager can always guide on the best suitable investment plans.

Portfolio Management Service Strategies

The portfolio manager uses different strategies to earn profit in the following ways:

1. Asset Allocation: The manager invests in different types and classes of assets to gain profit with significant risk. 

2. Diversification: The word diverse means that the manager diversifies the investment portfolio to gain profit and offset losses from one investment with the gain from another.

3. Rebalancing: The market conditions are ever-changing; thus, rebalancing the portfolio is necessary time and again to gain higher returns with little risk.

4. Tax Reduction: It means finding a strategy to avoid paying excessive taxes on investment profit returns.

Portfolio Management Service in India

Here’s what you have been waiting for, for so long! While more may come out as time passes if you want to set off on your PMS journey, here are a few that you could begin your search with. We have compiled a list of the Portfolio Management Services Companies in India, in no particular order:

  • Motilal Oswal PMS
  • Ask PMS
  • Kotak PMS
  • ICICI Prudential PMS
  • Aditya Birla Sunlife PMS
  • Alchemy PMS
  • Invesco PMS
  • Unifi Capital PMS
  • NJ Portfolio PMS
  • White Oak Capital PMS

The Bottom Line

There is no right or wrong time to begin investing; the best time, in all honesty, is whenever you start. Investors may spend any amount of time planning to begin, but as long as there is no execution, planning is just a waste of time and energy.

The fund requirement does make it so that not everyone can reap the benefits of Portfolio Management Services. However, one can always take baby steps and invest in what suits their financial abilities the best and build a corpus big enough to hire and use PMS.

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Deb P Samaddar

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Deb is a keen learner and eager to learn about the finance world. He is that person who would never stop talking, but my oh my, the words he uses, are not something a normal human would in a regular conversation. While the conversations are well, interesting, the write-ups are faultless. With an increased proclivity towards tech and language, he aims to capitalise on his interests as a content writer at Finology.

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