The investment climate is in a constant state of flux with the risk-return relationship changing frequently. In such an environment, investors are often on the lookout for investment products that can give them a higher yield while adhering to their risk boundaries. An investment product that has caught the fancy of investors, especially high networth individuals (HNIs), is PMS or portfolio management services. PMS is simply a service offered by fund managers to tactfully manage your investment portfolio.
Types of Portfolio Management Services in India
In this type, the portfolio manager is given complete discretion in the management of the portfolio. He has complete authority for the buying and selling of stocks.
In this type, the investor can be as involved as he wants in the management of the portfolio. Though this method gives more liberties to the investor, it defies the purpose of PMS as the professional portfolio manager, despite knowledge and aptitude, has to consult the investor before taking crucial investment decisions.
If you are going to invest in an equity PMS, then there are a few things that you must keep in mind:
PMS can definitely give HNI investors an opportunity to generate alpha. However, just as ‘all mutual fund investments are subject to market risks’, even PMS investments are subject to risks. It is important to be aware of these risks before investing in PMS.