Portfolio management services (PMS) are gaining popularity among wealthy Indians due to their attractive returns and personalised service. Unlike mutual funds, PMS has a higher minimum investment and caters to a more exclusive clientele. PMS firms typically employ fund managers who design portfolios tailored to investors' needs.

Wealthy Indians are increasingly turning to portfolio management services (PMS) for their attractive returns to grow their wealth. This rise in demand coincides with the overall growth in the number of high-net-worth individuals (HNIs) and Ultra HNIs in India. Unlike mutual funds with a minimum investment of Rs 500, PMS caters to a more exclusive clientele with a minimum investment of Rs 50 lakh. PMS firms typically employ fund managers who design portfolios around specific themes and manage a few stocks (it could be 5, 10, 23 or more, varying with the portfolio). And the portfolio can be tailor-made for clients with large investments. This personalised service offers wealthy investors a curated approach to (PMS) investment through professionally managed portfolios.

While higher returns are among the key reasons for an investor to consider investing in PMS investment approaches, it is not the only factor. 

Here are the top 5 reasons why you, as an investor, must consider PMS as an investment option. 

Well-regulated 

Despite the flexibility offered by Portfolio Management Services (PMS), investor protection remains a priority. the Securities and Exchange Board of India (SEBI), the market regulatory body in India, enforces strict guidelines for both PMS managers and Asset Management Companies (AMCs). These regulations ensure experience requirements are met and proper procedures are followed by AMCs. This legally bound investor-fund manager relationship fosters transparency and standardisation of services, ultimately creating a more investor-friendly environment.  In essence, the robust regulatory framework makes PMS a secure and well-defined investment avenue. 

Transparency 

PMS offers direct ownership of securities in your portfolio, providing transparency and clarity on your investments. This can be beneficial for investors who prefer a more hands-on approach. Investors can access detailed reports of their portfolio holdings, transactions, performance, fees, and charges regularly. In most cases, investors can also communicate directly with their portfolio managers and get regular updates and feedback on their portfolios. Portfolio managers typically provide regular updates and reports on your portfolio's performance. This transparency allows you to stay informed about the progress of your investments.

In addition, PMS Bazaar offer a wealth of information regarding the portfolio managers, fund managers, PMS products in the market - their performances, stock holdings, portfolio composition and more to aid in decision-making for investors. You can explore 450+ Alternative Investment Products & compare them to make informed investment decisions - CLICK HERE

Portfolio customisation 

PMS offers pre-built portfolios with varying risk profiles, from large-cap stocks to smaller, high-growth companies. To a large extent, investors can pick and choose the portfolio manager or their products based on their needs, risks and wealth creation strategy. But that said, to some large clients, PMS offers a dedicated portfolio manager who can craft and execute investment strategies tailored to an individual's needs. This personalised approach is ideal for investors seeking specialised thematic exposure or those who prefer a professional to manage their equity or fixed-income holdings directly.

Expert management 

Portfolio Management Services (PMS) leverage the expertise of qualified and experienced portfolio managers.  These financial gurus bring their deep understanding of both domestic and international markets to the table.  They meticulously research and select the most promising investment opportunities for each client's specific portfolio.  But their job doesn't stop there. These managers continuously monitor and assess the portfolio, making strategic adjustments as needed to optimise performance and keep your investments on track towards your wealth creation.

Flexibility and risk management 

PMS offers flexibility as investors can make changes in their portfolios as per their changing needs. They can also switch between different types of PMS (discretionary, non-discretionary, or advisory) at their convenience. PMS is not restricted to conducting market research and providing timely recommendations but also involves a robust risk management plan wherein portfolio managers thoroughly track and assess the market, interest rate, inflation risks and other macroeconomic factors and financial product-specific factors and diversify the portfolio. 

Since the investment market is characterised by constant fluctuations, keeping track of or monitoring these aspects helps them to make the right investment decision during bullish and bearish spells. Also, regular market research enables portfolio managers to safeguard investor’s holdings. Hence, this helps PMS providers minimise the risk and maximise returns in varied market situations.

Excess returns 

While mutual funds make a solid choice for core investment, PMS caters to a different niche.  If you seek to elevate your lifestyle with additional savings, PMS offers an attractive option.  It can also play a strategic role within a core-satellite portfolio structure, potentially boosting overall returns without jeopardising your core financial objectives.  These investments, if successful, can propel you to a new level without impacting your current lifestyle. Sample this.

In December 2023, PMS Bazaar conducted a study on PMS vs Mutual Funds performance across market capitalisation (large, mid, small and multi-cap) and across timeframes of 1-year, 3-years, 5-years and 10-years. In this study, it was revealed that PMS investment approaches outperformed their benchmark 70% on average across timeframes while mutual funds (regular) managed a respectable 48%. To know more about the study - CLICK HERE

Further, the core strength of PMS lies in its ability to outperform benchmark indexes by generating alpha, a measure of excess return compared to the market (index).  This advantage stems from its dynamic nature.  PMS allows for continuous adjustments based on evolving market conditions.  Portfolio managers and dedicated research teams constantly analyse financial trends, current events, and your portfolio to make informed entry and exit decisions, aiming to secure returns even in volatile markets. As such, this constant monitoring and tailored approach are key differentiators that position PMS as a potentially high-reward strategy.