Portfolio Management services
FAQs:
Q.1. What is Portfolio Management Services (PMS)?
ANS. PMS is a tailor-made investment service offered by professional portfolio managers to manage high-value investments in equity, debt, or other instruments, based on a client’s risk appetite and financial goals.
Q.2. Who is eligible to invest in PMS?
ANS. PMS is primarily for high-net-worth individuals (HNIs). As per SEBI, the minimum investment amount is ₹50 lakhs (in cash or securities).
Q.3. What are the types of PMS?
ANS.
Discretionary PMS: Fund manager has full control over investment decisions.
Non-Discretionary PMS: Client approves each transaction.
Advisory PMS: The manager gives advice; execution is client’s responsibility.
Q.4. What are the benefits of PMS?
ANS.
Personalized portfolio management
Professional fund management
Transparent reporting and tracking
Direct ownership of stocks and securities
Potential for tax efficiency in some strategies
Q.5. What are the risks involved in PMS?
ANS.
Market risk: Since PMS often involves equity or volatile assets.
Concentration risk: Fewer stocks may lead to higher risk.
Liquidity risk: Redemption may take time compared to mutual funds.
Manager risk: Returns depend heavily on the skill of the portfolio manager.
Q.6. How is the performance of PMS reported?
ANS. PMS providers are mandated by SEBI to report performance (net of all fees). You will receive:
Monthly or quarterly reports
Portfolio holdings & valuation
Capital gains & transaction summary
Q.7. How are PMS returns taxed?
ANS. Since you directly own the securities:
Equity PMS Taxation (Listed Shares):
STCG (≤ 12 months): Taxed at 20%.
LTCG (> 12 months): Taxed at 12.5%.
Dividends: Taxed at the investor's applicable income tax slab rate.
Non-Equity/Debt PMS Taxation:
STCG (≤ 36 months): Taxed at the investor's marginal slab rate.
LTCG (> 36 months): Taxed at 20% (with indexation benefits).
PMS does not deduct TDS on capital gains — you are responsible for paying taxes.
Q.8. What are the typical fees in PMS?
ANS. PMS providers usually charge:
Fixed Management Fee: 1%–2.5% annually
Performance Fee: 10%–20% of profits above a hurdle rate (e.g., 10%)
Entry/Exit Load: Sometimes applicable
Fees can be structured as:Fixed only
Profit sharing only
Hybrid (fixed + performance)
Q.9. How can I invest in PMS?
ANS. You can invest through:
Registered PMS providers
Banks and wealth management firms
SEBI-registered investment advisors
You’ll need:
PAN card
KYC documents
Demat account
Minimum ₹50 lakh investment
Q.10. Can I redeem or exit PMS anytime?
ANS. Yes, but PMS investments are relatively less liquid:
Some providers have lock-in periods (typically 1–3 years).
Partial withdrawal may be allowed depending on the scheme.
Exit loads may apply.
Q.11. Is PMS regulated by SEBI?
ANS. Yes. PMS providers must be registered with SEBI, and they follow strict regulations regarding client money, disclosures, and reporting.
Q.12. What should I check before choosing a PMS provider?
ANS.
Regulatory registration (SEBI)
Past performance and consistency
Investment strategy (concentrated/diversified)
Transparency of fee structure
Quality of reporting and client service
Q.13. Are returns in PMS guaranteed?
ANS. ❌ No. Returns are not guaranteed. Like all market-linked investments, PMS returns are subject to volatility and market performance.
Q.14. What is the reporting frequency in PMS?
ANS. You’ll typically receive:
Monthly/quarterly statements
Real-time or periodic online access
Year-end reports for taxation
Q.15. Can NRIs invest in PMS?
ANS. Yes, NRIs can invest in PMS under RBI guidelines via NRE/NRO accounts with appropriate approvals (including PIS permission where required).
Q.16. Can I switch from one PMS to another?
ANS. Yes. However:
Fees may apply
You may need to sell current holdings, triggering capital gains
A fresh onboarding process is required
Q.17. Is PMS suitable for me?
ANS. PMS is suitable if:
You can invest ₹50 lakh or more
You want a tailored portfolio
You have a medium- to long-term horizon
You're comfortable with higher risk and volatility