portfolio management - PMS


PMS i.e. Portfolio Management Services is managing the client’s portfolio according to its risk appetite. It is guided by Security Exchange Board of India (SEBI). It is Discretionary i.e. client can instruct Portfolio manager wherein under Non – discretionary client don’t have say in it, he can only ask about performance.

Risk Parameter
When it comes to risk parameter. It is one of the high risky products which generally have high BETA.

Suitability
It is suitable for customers whose risk appetite is high and who want to beat the market return.
Generally these are High Net worth Individuals (HNIs), Super HNIs and people whose net worth is more than 1 cr. As minimum ticket size is INR 25 Lakh.

These are mostly at high end of profit/Losses. Some of the renowned fund managers who have beaten the market with huge difference are –


Fund Manager/
Company

Fund name

Returns
(%)

Ambit Capital

Good & Clean India
Fund

12.8

Reliance Nippon

Absolute Freedom

18

2Point2 Capital

Long Term Value Fund

21.5

ASK PMS

IEP

19.1

Aditya Birla Capital

Multi Cap

16.1

Churn Rate

Churn Rate means the buying/Selling of scrips in portfolio. Churn Rate is high in the PMS. In some cases it crosses 30%.

Conflict of Interest
Sometime what happens is that DEMAT account is with the fund manager only. So, to generate revenue through brokerage, the manager churns at very high rate.
Is past record the only parameter to judge the PMS?
A big “NO”. It is one of the parameter not the only parameter. Discussion with the fund manager will let you know about his thought process. His views about the market. If he answers without backing which is logically correct then he is not the right person to be with. Try to find out his analysis process that whether it is viable or not. Talk to the current investor of the PMS.
A right fund manager is must because you are not betting your money in the market, you are betting your money on the fund manager. So, Fund manager must be reachable to you.
Ask the fund manager “What sets you apart from the crowd?” If his answer pleases you then you can park your money in his fund.

P.S. – PMS is one of the risky product. We are not endorsing any PMS. Please do thorough research before investing.

Leave a Reply

Your email address will not be published. Required fields are marked *

Open chat
1
Chat 24x7
Hello, My name is Leena :)

Would you like to get a free portfolio review?

Or just ask me anything.. I will reply within minutes!