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Financial Services > Knowledge Center > Investment > Investment FAQs – Portfolio Management Services

Investment FAQs – Portfolio Management Services
What is Portfolio Management Services (PMS)?
Portfolio Management Service is a tailor made professional service offered to cater the investments objective of different investor classes. The Investment solutions provided by PMS cater to a niche segment of clients. The clients can be Individuals or Institutions entities with high net worth. In simple words, a portfolio management service provides professional management of your investments to create wealth.
What is the difference between a discretionary portfolio manager and a non- discretionary portfolio manager?
The discretionary portfolio manager individually and independently manages the funds of each client in accordance to objective of the strategy. Stock selection is done as per the discretion of the Fund management team of the PMS provider, whereas the non-discretionary portfolio manager manages the funds in accordance with the directions of the client. At Motilal Oswal Asset Management Company Ltd., we have a dedicated team of professionals for discretionary portfolio management services who have decades of experience in managing money and creating wealth for our investors.
 
Is there a minimum investment amount required to invest in Portfolio Management Services?
Yes, as per the SEBI regulations, to invest in PMS you must have a minimum corpus of Rs. 25 lacs. However there is no upper limit on the amount you can invest.   
What is the difference between PMS and Mutual Funds?

  Following are the key differences between PMS and Mutual Funds:

Features

PMS

Mutual Fund

Management

Provide ongoing, personalized access to professional money management services

Provide access to professional money management services

Customization

Portfolio can be tailored to address each investor`s specific needs 

Portfolio structured to meet the fund`s stated investment objectives

Ownership

Investors directly own the individual securities in their portfolio, allowing for tax management flexibility

Shareholders own shares of the fund and cannot influence buy and sell decisions or control their exposure to incurring tax liabilities

Liquidity

Although managers may hold cash, they are not required to hold cash to meet redemptions

Mutual funds generally hold some cash to meet redemptions

Minimums

Significantly higher minimum investments than mutual funds. As SEBI Rules minimum investments is Rs 25 Lacs.

Rs. 5,000

Flexibility

Generally more flexible than mutual funds. The Portfolio Manager may move to 100% cash if required. The Portfolio Manager may take his own time in building up the portfolio. The Portfolio Manager can also manage a portfolio with disproportionate allocation to select compelling opportunities

Comparatively less flexibility

Number Of Stocks

PMS generally have a focused portfolio of 15-20 stocks, enabling portfolio manager to put meaningful allocation in stocks/sector where he/she is most bullish on.

Most Mutual Fund schemes have anywhere between 50-60 stocks.
Portfolio Management Services is ideal for what type of investors? Portfolio Management Services is best suited for investors who:

  • Lack sufficient time to adequately monitor and manage a portfolio on their own.

  • Lack sufficient interest and knowledge in the financial marketplace to obtain the desired result 

  • Are looking to create wealth in equities with the help of professionals.

  • Desire personalized  and research oriented investment solutions

  • Desire long-term wealth creation 

  • Appreciate  high levels of  transparency & service 
Why should I take the services of Portfolio Managers, when I can invest/trade on my own?

There are 2 ways an individual may decide to invest his money. 

  • Either on his own (through tips, hearsay, hunches, opinions on newspaper/TV etc.)  This is like trying to do a heart surgery on your own and can be dangerous for your financial health.

  • Second way is to take the services of a seasoned professional (like a portfolio manager) who is a subject matter expert. Investments and wealth creation is a very specialized field and requires deep understanding of financial markets. It’s like choosing a renowned heart surgeon for a heart bypass.An Investor may decide any of the way which is more suitable to his/her need but it is always advisable to trust a professional for the job of creating wealth for you. 
How do I select a good Portfolio Manager?

It is very important to select a portfolio manager who can make your money grow faster. An investor needs to keep check following points before selecting a PMS provider:

  • Experience of  the Fund Manger

  • Number Of Years Of Performance

  • Size of the Fund and Customer Base: Big size of the fund and large customer base indicates excellent trust developed with the clients.

  • Consistent track record of outperforming the benchmark.

  • What are the risk adjusted returns: Simply put what is the amount of risk the portfolio manager is taking to generate returns for you. Lesser the risk fund manager takes to generate outperformance, better quality the portfolio is.

  • Churn Levels in the portfolio: Lower the churning, higher is the tax adjusted return of your portfolio. Higher churn increases cost to your portfolio and vice-versa.

  • Are the returns rated by renowned independent agency?

  • Size of the Fund and Customer Base: Big size of the fund and large customer base indicates excellent trust developed with the clients.

  • Consistent track record of outperforming the benchmark.

 
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Reg. Office: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad (West), Mumbai 400 064. Tel: 022 3080 1000
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Registration Nos.: NSE (Cash) : INB231041238 ; NSE (F&O) : INF231041238 ; NSE (CD) INE231041238 , BSE (Cash) : INB011041257 ; BSE(F&O) : INF011041257 ; MCX-SX (Cash) INB261041231;MCX-SX (F&O) INF261041231; MCX-SX (CD) INE261041231 ;CDSL : IN-DP-CDSL-09-99 ; NSDL : IN-DP-NSDL-152-2000 ; AMFI :ARN 17397 *PMS : INP000000670; *PMS & Mutual funds are offered through Motilal Oswal Asset Management Company (MOAMC) which is group company of MOFSL. PMS Regn No. INP000004409 is offered through Motilal Oswal Wealth Management Pvt. Ltd (MOWMPL) which is group company of MOFSL *Motilal Oswal Commodities Broker Pvt Ltd (MOCBPL) member of MCX, NCDEX and NSEL. MCX Member ID 29500, NCDEX – NCDEX-CO-04-00114, NCDEX Spot Exchange Limited 10014 & National Spot Exchange Ltd (NSEL): 13730. FMC Unique membership code: MCX: MCX/TCM/CORP/0725, NCDEX: NCDEX/TCM/CORP/0033,. Commodity Services are offered through MOCBPL which is a group company of MOFSL. Motilal Oswal Securities Ltd is a Distributor of Mutual Fund, IPOs and Insurance Product. *Investment in securities is subject to market risk.
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