Portfolio Management Services or PMS are offered by many Wealth Management firms to cater to the needs of High Networth Individuals. A PMS is like a Mutual Fund, but the minimum investment amount is Rs.25 lacs as prescribed by SEBI regulations. PMS are of two types, discretionary and non- discretionary. In a discretionary PMS the portfolio manager manages the investments of his clients in their best interests. He takes the decisions on their behalf. In a non-discretionary PMS, the portfolio manager provides information and guidance to the clients and manages the portfolio in accordance with their decisions. The tax treatment of a PMS is similar to Equity and the investor has to bear the Securities transaction tax, Short term and Long term capital gains tax as applicable. Mutual Funds have an advantage here, to the effect that they don’t have to pay LTCG and STCG tax for portfolio churning.
The Portfolio Management industry is not as closely regulated as Mutual Funds as the investors are High Networth Individuals and Institutions, who are in a better position to look after their interests than retail investors. PMS is better than investing directly in Equity shares as investors to not have to do the research required to manage their investments. Also, it is difficult, even for an HNI or Institutional investor to gather the information and skill set required to manage their own investments. The PMS provider will charge a fee for managing the portfolio, just like an Asset Management Company charges a fee on the overall assets under management.
Mungekar Wealth 