1. Portfolio Management Services in
India
Bhavna Goyal
Faculty: N. M. College of
Commerce & Economics

2. Meaning
Portfolio Management Services account is an
investment portfolio in Stocks, Debt and fixed income
products managed by a professional money
manager, that can potentially be tailored to meet
specific investment objectives.

3. Types of PMS
Discretionary PMS – Where the investment is at
discretion of the fund manager & client has no
intervention in the investment process.
Non-Discretionary PMS – Under this service, the
portfolio manager only suggests the investment
ideas. The choice as well as the timings of the
investment decisions rest solely with the investor.
However the execution of the trade is done by
the portfolio manager.

4. Fees in a PMS
Portfolio management services either have a
Fixed
Profit-sharing
Hybrid fee structure

5. Advantages of PMS
PMS trade in a wide range of
securities, which are not available to a
mutual fund.
PMS regulations are less strict than MF
regulations.
 A PMS is a more personalised investment
solution.

6. Disadvantages of PMS
It do not disclose the portfolio as much as
MFs.

7. Example of Portfolio management
Service Providers
Prudential ICICI
Prudential ICICI Asset Management Company
is a joint venture between Prudential Plc. - UK‘s
leading insurance company and ICICI Ltd. India’s premier financial institution. The
Company serves as the investment manager
for Prudential ICICI Mutual Fund, one of India’s
largest private sector mutual fund.

8. Example of Portfolio management
Service Providers
Reliance Portfolio Management Services
Reliance Portfolio Management Services is an
exclusive offering from the portfolio management
division of Reliance Capital Asset Management
Ltd., a wholly owned subsidiary of Reliance Capital
Ltd., Reliance Capital Asset Management Ltd. is
also the investment manager for Reliance Mutual
Fund schemes wherein it manages assets worth
over Rs. 42,200 crores (as on Feb 28, 2007).

9. How can investor invest in PMS
There are two ways in which an investor can invest in
a Portfolio Management Services:
Through Cheque payment
Through transferring existing shares held by the
customer to the PMS account. The Value of the
portfolio transferred should be above the minimum
investment criteria.

10. How can investor invest in PMS
Beside this customer will need sign a few
documents like:
PMS agreement with the provider
Power of Attorney agreement
New demat account
Documents like PAN, address proof and
Identity proofs are mandatory.

11. :
PROCEDURE FOR SETTING UP
PORTFOLIO MANAGEMENT SERVICES
(1) Necessary infrastructure like adequate office
staff, equipment and manpower to discharge the day
to day activities.
(2) To employ minimum two persons with experience
to conduct portfolio management business.
(3) Any person who is directly or indirectly connected
with the applicant has not been granted registration.
(4) The capital adequacy is not less than a net worth of
Rs. 2 Crores in terms of capital plus free reserves.

12. :
PROCEDURE FOR SETTING UP
PORTFOLIO MANAGEMENT SERVICES
(5) The applicant or his partner or director or principal
officer is not involved in any litigation connected with
the securities market.
(6) The applicant has professional qualification in
finance or law or accounting and business
management.
(7) The grant of certificate is in the interest of the
investors

13. Roles and Responsibilities of
Portfolio Manager
A portfolio manager plays a pivotal role in deciding
the best investment plan for an individual as per his
income, age as well as ability to undertake risks.
A portfolio manager is responsible for making an
individual aware of the various investment tools.
A portfolio manager is responsible for designing
customized investment solutions for the clients.
A portfolio manager must keep himself updated with
the latest changes in the financial market.

14. Roles and Responsibilities of
Portfolio Manager
A portfolio manager ought to be unbiased and a
thorough professional.
A portfolio manager needs to be a good decision
maker.
He should communicate with his client on a regular
basis.
He should be patient with his clients.
He should never sign any important document on his
client’s behalf

15. Roles and Responsibilities of
Portfolio Manager
He should never pressurize his client for any plan.
He should keep client money in separate account with
the public sector bank.
He should maintain the separate ledger account for
all purchases and sales taken at market price.
Final settlement and termination of contract should
be done as per contract.

16. Reports expected from Portfolio
Manager
The portfolio manager shall furnish periodically a report to the
client, as agreed in the contract, but not exceeding a period of six
months and as and when required by the client and such report
shall contain the following details, namely:(a) the composition and the value of the portfolio, description of
security, number of securities, value of each security held in the
portfolio, cash balance and aggregate value of the portfolio as on
the date of report;
(b) transactions undertaken during the period of report including
date of transaction and details of purchases and sales;

17. Reports expected from Portfolio
Manager
(c) beneficial interest received during that period in
respect of interest, dividend, bonus shares, rights
shares and debentures;
(d) expenses incurred in managing the portfolio of the
client;
(e) details of risk foreseen by the portfolio manager and
the risk relating to the securities recommended by the
portfolio manager for investment or disinvestment.

18. PMS Product
There is a wide range of PMS product options in the market.
Portfolio Management Services help you to take an optimum
decision in choosing the ideal option. It gives you access to a
wide choice of the best fund managers of AMCs offering
customised Portfolio Management Services (PMS).
Equity Advisory Products
Equity investment has become a more involved activity. It calls
for awareness and understanding of the business and economic
variables that affect equity valuations. There are several
products that will help you make the appropriate equity
investments. You can opt for dividend yield portfolios, equity
portfolios investing in stocks across market capitalisations or
products investing in large or mid-cap stocks.

19. PMS Product
Capital Protected Products
Equity and derivative-linked capital protection products offer
you a flavour of the equity markets with capital preservation.
Prudential ICICI and Benchmark offer you options in this
category of PMS products.
Derivative Arbitrage Products
These are a range of products that enable you to take advantage
of arbitrage opportunities in the derivative markets. They also
take advantage of spreads between the price of a stock future
and the underlying stock. Such products are suitable for people
with investments in relatively low-risk assets who are looking for
potentially higher risk-adjusted returns.

20. PMS Product
Pure Derivative Products
These products endeavour to achieve significant
appreciation in capital, by investing in a mix of stock and
index options. The portfolio may be considered suitable:
For investors with a high-risk appetite who desire
significant appreciation in their capital and are willing to
take on risk for the same
As a portfolio return enhancer for clients with large
investments in low-risk fixed income assets

21. PMS Product
Alpha Products
The Alpha Portfolio seeks to capture Alpha - which is out
performance to the index on the client’s portfolio.
Thus, the entire portfolio will be hedged against overall
market movements by using derivatives. It seeks only to
gain from out performance vis-à-vis market while
eliminating beta. The Alpha Portfolio is suitable for
investors with a low to medium risk profile and an
investment horizon of more than 12 months.