Q: What is Portfolio Management Services?
PMS is an investment portfolio of stocks, fixed income, debt, cash, structured products and other securities that is tailored to meet specific investment objectives.
Q: What are the benefits of PMS?
PMS can offer the following characteristics: inpidualised portfolios, professional management, richer canvas, flexibility, transparency, persification and asset allocation, among others.
Q: What types of investors own PMS accounts?
Each inpidual client has different needs that change over time. A Financial Advisor can help the investor decide whether portfolio management service is appropriate, based on his current financial situation, investment objectives, time horizon, risk tolerance and other factors.
Q: What investment strategies are available?
PMS is offered in a wide variety of asset classes and investment styles, including large cap, mid cap, small cap, multi cap, value and growth and international asset.
Q: What is the role of the Financial Advisor after a PMS account is opened?
The Financial Advisor helps the investor identify and select investment options, and continues to provide the services of a primary relationship manager. Financial Advisors take on a consultative role with the investor by helping the investor work with the portfolio management team to discuss and determine the appropriateness of the investor's current investment strategy. Financial Advisors also help in evaluating the investment performance of the investor.
Q: How does the investor stay updated on his portfolio's performance?
Regular communication from the portfolio management team is an essential tool in keeping the investor and the Financial Advisor informed. Among the tools that are usually provided: periodic performance reporting, monthly investment commentary, and online portfolio information.
Q: What is the difference between a PMS account and a mutual fund?
Unlike an investor in a mutual fund, portfolio managed account holders own the inpidual securities in their accounts. Although investment managers oversee hundreds of accounts, a PMS investor's account is "separate" from that of any other investor, which gives the investor the ability to direct the manager to customize the portfolio based on personal and financial needs and goals. For example, the investor may request that the portfolio include or exclude a particular security or sector, or that some holdings be sold to produce capital gains or losses.
Q: What if the investor has special requests?
PMS allow investors to impose reasonable stock, sector, or other preferences and restrictions on the management of their accounts. For example, if the investor owns his employer's stock in investment, the investor and the Financial Advisor may decide not to invest additional assets in the company.
Q: How much input does the investor have in the stocks that are chosen for his portfolio?
The Investor and the Financial Advisor will want to have an initial consultation to discuss specific objectives, risk tolerance, time horizon, and goals. Depending on the PMS account chosen, the investor may have the ability to impose reasonable investment restrictions on the management of his account. Some PMSs offer more flexibility than others, usually based on the amount invested.
Q: What are the minimum investment requirements for PMS accounts?
A single style PMS usually requires an investment minimum of Rs. 1 crore and above for Equity, Rs. 5 crore and above for Debt, Rs. 20 lacs and above for Structured.
Q: Are there risks associated with PMS investments?
Yes. All investments involve a certain amount of risk, including the possible erosion of the principal amount invested, which varies depending on the security selected. For example, investments in small and mid-sized companies tend to involve more risk than investments in larger companies.