What are PMS and how do they work?

In an ever-changing financial market, investors seek avenues that provide both rewards and tailored solutions to achieve their objectives. Portfolio Management Services (PMS) is one such option, created for high-net-worth individuals (HNIs) who want greater personalization and higher returns than traditional mutual funds.

What are Portfolio Management Services?

Portfolio Management Services (PMS) involve a professional portfolio manager managing a portfolio of stocks, fixed-income securities, and other individual assets. A PMS provides tailored investment strategies based on the client's financial goals, risk tolerance, and preferences. Unlike mutual funds, where investments are pooled, PMS offers more personalized and bespoke management, ensuring investors hold individual stocks or assets under their names.

Types of Portfolio Management Services

There are 3 main types of PMS:

• Discretionary PMS: The portfolio manager takes full control of investment decisions and manages the portfolio without client approval for every trade.
• Non-Discretionary PMS: The portfolio manager provides advice and makes suggestions, but the client retains control and approves each transaction.
• Advisory PMS: The portfolio manager only acts as a consultant, providing advice while the client makes all the final decisions.

How Does a PMS House Function?

A PMS house consists of experienced portfolio managers, analysts, and financial planners who collaborate to develop a comprehensive investment strategy.

• Client Assessment: The process begins with an understanding of the client's financial objectives, risk tolerance, and investment horizon.
• Portfolio construction: Based on the assessment, the portfolio manager creates a tailored portfolio of stocks, bonds, or other investments.
• Ongoing Management: The PMS firm regularly monitors the portfolio and makes adjustments as needed based on market conditions, company performance, or macroeconomic developments.
• Regular Reporting: Investors receive regular updates on the success of their portfolios, as well as a thorough report on the techniques used.

Benefits of Portfolio Management Services

• Personal Approach: In contrast to mutual funds, which take a one-size-fits-all approach, PMS provides a tailored investments that coincides with individual goals.
• Active Risk Management: PMS managers can dynamically manage risk since they have direct control over asset selection, as opposed to mutual funds, which share risk with all investors.
• Transparency: PMS accounts are more transparent, providing complete information about each asset held, decisions taken, and investment performance.
• Potential for higher returns: PMS has the potential to generate better returns because it is actively managed and personalized, especially in positive markets.
• Exclusive Services for High-Networth Individuals: PMS is primarily targeted at high-net-worth individuals, letting them invest in a more structured, deliberate manner.

If you're a high-net-worth individual searching for personalized asset management services with the potential for higher returns, a PMS can be a wise decision. PMS can assist improve your investments by managing your assets and employing market experience, resulting in a mix of growth and risk control. Remember, we can help you choose a reputable PMS firm with a proven track record and an investment philosophy that matches your financial objectives.