What is Portfolio Management Service (PMS)?
Portfolio Management Service (PMS) is a specialized service designed to meet the investment needs of individuals and institutions, particularly high net-worth individuals (HNIs). With PMS, investors can entrust professionals to manage their investment portfolio across various asset classes, aiming for competitive returns.
Understanding the Types of Portfolio Management Services
Active Portfolio Management:
Focuses on maximizing returns by diversifying investments across asset classes, industries, and businesses to reduce risk. Involves higher turnover compared to passive management.
Passive Portfolio Management:
Adheres to fixed profiles aligned with market trends. Typically involves investing in index funds passively, with minimal intervention and low turnover, offering good long-term returns.
Discretionary Portfolio Management:
Portfolio manager manages the portfolio based on investor objectives, risk tolerance, and investment duration. Strategies are tailored to individual needs, recommending suitable investments like equity or debt-oriented funds.
Non-Discretionary Portfolio Management:
Portfolio managers offer investment advice, but the final decision rests with the investor. Once approved, managers execute the investment strategy on behalf of the investor.
Benefits of Portfolio Management Services
Expert Opinion on Investments:
Professional portfolio managers handle investments, leveraging their expertise to manage market volatility and aim for increased profits over time.
Customized Investment Plans:
Strategies are tailored to individual financial objectives, income, risk tolerance, and age, ensuring alignment with investor preferences.
Efficient Risk Management:
Focus on diversification to reduce investment risk and mitigate losses during market fluctuations.
Regular Monitoring:
Portfolio managers monitor asset performance and returns regularly, adjusting investments to meet financial goals.
Objectives of Portfolio Management
Achieving desired Return on Investment (ROI) according to investor goals.
Minimizing portfolio risk in line with investor risk tolerance.
Optimizing diversification and allocation based on investor preferences.
Aligning the portfolio with investor time horizon, liquidity needs, and tax considerations.
Rathi
Marketing Intern
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