According to a study conducted by the Global Financial Literacy Excellence Centre, only 24% of adults in India are financially literate. India has the lowest financial literacy rate compared to other emerging economies.
The number of high-paid professionals in corporate and entrepreneurial roles is also on the rise. Portfolio Management Services (PMS) can bridge the gap between rising demand for financial products and increasing income levels. What is a Portfolio Management Service, how does it function, and what are some of its main benefits?
What is PMS?
Portfolio Management Service (PMS) is a service designed to meet the needs of investors, including high-net-worth individuals and institutions. It is tailored to allow investors to earn competitive returns on different asset classes.
PMS provides investors with limited financial knowledge the opportunity to take advantage of all investment opportunities. Portfolios are customized to meet the needs of each investor.
What are the types of PMS?
PMS can be divided into three categories: Discretionary, Non-Discretionary, and Advisory.
- Discretionary PMS: Portfolio managers or fund managers make all investment decisions on behalf of the client. They can even handle tasks such as documentation.
- Non-Discretionary PMS: In a non-discretionary system, the portfolio manager acts as an advisor. The manager provides suggestions and advice, but the client makes the final decision. The portfolio manager is responsible for executing the transaction.
- Advisory PMS: As the name suggests, an advisory PMS involves a portfolio manager who only makes investment suggestions. The client decides whether to follow the advice. The client is responsible for all aspects of the transaction, from planning to execution.
What does PMS include?
A reputable PMS aims to provide clients with higher returns while minimising risks. Here is a brief overview of its services:
- Security Analysis and Portfolio Creation: The first step is to conduct a security analysis. Portfolio managers examine various investment options to assess risk and potential return. Securities are chosen based on the fund or service goals. Many PMS providers offer multiple funds to give clients a range of choices. The chosen fund and bonds depend on the client’s expectations, risk profile, and investment goals.
- Portfolio Revision: PMS is not a one-time process. Fund managers continuously monitor the portfolio and make adjustments as needed. If a client is uncomfortable with the level of risk, they can transfer funds to safer securities if a security turns out to be more volatile than expected. Investors can make frequent adjustments to maximise returns and align with their risk appetite.
- Portfolio Evaluation: Evaluation is a crucial aspect of PMS. Fund managers regularly assess their various funds, evaluating risks and returns to identify areas needing revision. They seek securities that could provide higher returns while meeting the fund or investors’ objectives.
What are the benefits of PMS?
Here are some benefits of Portfolio Management:
- Professional Investment Management: The greatest advantage of PMS is professional investment management. With PMS, you can access investment professionals who understand the financial world and are equipped to make profitable investments on your behalf. Typically, you will pay the PMS a percentage of your return.
- Portfolio Customization: Investors have diverse goals, risk profiles, and investment amounts. PMS provides customised investment opportunities tailored to each investor’s unique needs and objectives.
- Regular Review of Maximum Earning Capacity: The investment world is dynamic, with many rewarding opportunities available. Professional fund managers continuously monitor these opportunities to maximise returns. Your portfolio will be reviewed periodically to ensure you achieve your investment goals.
PMS for Financial Goals
Finance can be a complex subject. Most investors do not have the time to master all securities. Professional portfolio management can be extremely beneficial in such cases. A PMS can help you achieve high returns with minimal risk. To reach your financial objectives in a timely, transparent, and reputable manner, choose only reputable and registered providers of PMS.
