A portfolio can be regarded as a collection of goods featuring different items or diverse financial instruments, including bonds, stocks, cash, and so on. This collection of goods can be held by institutions, individuals, and organizations.

 

When these items are bought, some amount of money is spent by the individual. At the same time, during the purchase of financial instruments, some amount of money is put in the collection or invested in these financial instruments. Eventually, we all expect some return on what we invest. 

 

Due to this, the financial instruments should be managed, just like basic items, to be used in a certain manner. These services are known as Portfolio Management Services or PMS. These are headed by portfolio managers as they have in-depth knowledge on the given matter and have specialization in handling such portfolios. 

 

As a summary, a portfolio is regarded as a collection of financial instruments held by institutions, individuals, and others. Portfolio management services are offered to manage these portfolios and obtain the highest possible returns by keeping in mind the diverse requirements of individuals. These services are headed by a portfolio manager along with a research team that backs the decisions made by the portfolio manager. For more insight into portfolio management, you should consult experienced stock advisors in India. 

 

Types of Portfolio Management Services

1. Active Portfolio Management: The primary objective of the portfolio manager is to maximize returns. In the method of active portfolio management, the portfolio manager aims to minimize the risk of your investments. The manager does this by diversifying your portfolio across different asset classes, industries, and businesses. In comparison to the passive style, this mode of diversification delivers a higher turnover.

 

1. Passive Portfolio Management; This form of management focuses on fixed profiles that are aligned with the current market trends. In the given scenario, portfolio managers tend to invest in index funds. This fund grows passively over a period of time with minimal intervention. This method might yield a low turnover but is known to offer reliable long-term returns.

 

1. Discretionary Portfolio Management: In this case, the portfolio manager is responsible for managing a particular portfolio. Depending on your financial objectives, investment duration, and risk tolerance, the portfolio manager will select the right strategy that is believed to best suit your portfolio. 

 

For example, portfolio managers might suggest investing in equity-centric funds to a risk-taking investor. To a risk-conscious investor, the manager might suggest investing in debt-centric funds. 

 

1. Non-discretionary Portfolio Management: In this practice, portfolio managers will recommend you to invest. However, the final decision will remain yours. Once you give the approval, the managers will take care of the right action on your behalf.

 

How Do Portfolio Management Services Work?

In this scenario, the investor will enter into an agreement with the portfolio manager with respect to the service they wish to invest in. It is essential to open a demat account for an individual to invest in the PMS. Ultimately, the shares are transferred to your account. The dividend you earn out of the same will go into your bank account. This scenario depicts that you are the ‘independent owner’ of the stocks.

 

The portfolio manager is also responsible for offering you the in-depth evaluation report about the overall performance of your profile. The frequency will be decided by the investor and the manager. 

 

As far as taxation of the PMS is concerned, it is analyzed for every stock separately. This is because the transactions are carried out from the demat account of the investor. Therefore, these are treated as standard buy-sell transactions.

 

Advanced portfolio management services also provide customization and the ability to earn higher returns. You can go ahead with choosing a dedicated PMS strategy that caters to your financial needs. 

 

With the help of portfolio managers and stock advisors in India, you have the ability to invest in both active as well as passive portfolios. 

 

Benefits of Portfolio Management Services

 

1. Customizable: One of the most attractive features of a PMS is that it can be customized according to stocks, shares, or asset classes in which investors are interested. This will make sure that the objectives of the investors are fulfilled as accurately as possible. Investments are made according to the risk appetite of the investor which further protects your investment. 

 

This feature is not available for mutual funds. An investor is not able to choose what they want to invest in particularly, when they invest in a mutual fund, they only own a unit of shares that is a part of the fund.

 

1. Transparency: According to the SEBI regulations, the investor is always aware of every transaction taking place in a PMS along with the overall cost structure. The investor will obtain a report on the returns of the portfolio monitoring service along with the benchmark value so that the performance can be tracked by the investor over time. 

 

As a matter of fact, the reporting standards will improve from here on. In this case, full transparency is always ensured. On the other hand, in the case of mutual funds, the investor is not informed about every transaction. They only get a monthly report which offers them an insight into the mutual fund. 

 

1. Accessibility: PMS serves to be a customized service that is offered to an investor. The portfolio manager is constantly in touch with the clients while keeping them informed of the latest developments. The clients will be able to approach the manager freely with respect to any concern or query. There is no bias involved. 

 

Every client is treated equally. In the case of mutual funds, it is not the case. Investors cannot just approach the manager whenever possible, 

 

Conclusion

PMS or Portfolio Management Services deliver major benefits by offering professional expertise, active risk management, and personalized strategies. Ultimately, they lead to better returns and time efficiency for investors. As you entrust your portfolio to experienced portfolio managers, you can benefit from customized investment strategies.