What is PMS ? (Portfolio Management Services)

Portfolio Management Service (PMS) is a professional financial service where skilled portfolio managers and stock market professionals manage your equity portfolio with the assistance of a research team. Many investors have equity portfolios in their Demat Account but managing them can be a challenge. PMS is a systematic approach to maximise returns while minimising the risk factor on your investments. It enables you to make sound decisions that are supported by extensive research and factual data without lifting a finger. Additionally, it better prepares you to deal with market adversity.

Let us read more about this service.

Features and Benefits of Portfolio Management Services

Asset Allocation

Dividing your investment among different asset classes is defined as asset allocation. This mix needs to be done in such a way that the investors can safeguard their funds from risk and generate superior returns on them.


Portfolio Management Services provides a customized investment solution to investors. Portfolio managers have the liberty to diversify an investor’s portfolio depending upon his risk appetite and returns generated on his existing investments.

Portfolio Performance Tracking

Tracking the performance of a portfolio is one of the benefits of a PMS service. You can track your holdings in real-time and the investor is updated with the market situation as well.

Risk Management

Investments come with a certain degree of risk. With the best PMS services, you can control the amount of risk you would want to take. With real-time tracking, under the Non-discretionary PMS , you can decide if the invested instrument needs to be held or redeemed before maturity

Maintaining Liquidity

Investments are made to fulfill financial goals. The best PMS services provider in India helps in maintaining liquidity so that you can redeem your investment in time of need.


The best Portfolio Management Services can help in reaching your financial goals. Apart from this it also helps investors in understanding their finances. By imparting continuous knowledge and investment strategies, it helps investors to understand how the funds work and helps in making informed choices.

Types of Portfolio Management Services

There are two types of Portfolio Management Services provided by the PMS companies in INDIA.

Discretionary Portfolio Management Service :

In discretionary PMS service, it is the portfolio manager that independently and individually manages the funds and securities. Investors do not have to make any financial decisions. They inform the portfolio manager of their needs and the manager works following them.

Non-Discretionary Portfolio Management Service:

When the portfolio manager manages the funds in harmony with the directions of the client it is termed as a Non-Discretionary Portfolio Management Service.

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How does Portfolio Management Service Work?

  1. The investor chooses which scheme they want to opt for; discretionary or non-discretionary PMS.
  2. The investor invests the minimum amount which is INR 50 Lakhs.
  3. If the investor opts for discretionary PMS they will receive continuous updates on the performance of their portfolio.
  4. Evaluation and adjustments are done based on the requirements of the investor.

Aspects of Portfolio Management Service

Why PMS?
  • Professionally managed portfolios.
  • Customised portfolio as per the financial needs to the investor.
  • Risk is also managed since the fund managers have a wealth of knowledge.
  • Possibility of superior returns.
Who Should Invest in PMS ?
  • High net worth individuals.
  • Individuals who have a high risk appetite.
  • Investors looking for superior returns.
What is Taxability on PMS ?
  • Profits earned on Portfolio Management Services attract capital gain tax.
  • Profits earned on the investments held for one year or less attract short-term capital gains. It is taxed at 15% plus cess.
  • Long-term capital gain is paid for any profit earned after 1 year and the investor is liable to pay 10%, without any indexation benefit.

Frequently Asked Questions (FAQs):

Is it worth Investing in PMS?

For most retail investors, PMS are not a viable option, given the high starting amount. Portfolio management services are aimed at HNIs who wish to invest in a multitude of investing options. However, when it comes to retail investors PMS services can be a deterrent considering the high amount required to start with.

What is the Minimum Amount of PMS in India?
  • According to SEBI guidelines, the minimum investment amount is INR 50 Lakhs.

What is the Difference Between AIF and PMS?

Alternate Investment Funds gives the investor the flexibility to invest in derivatives, hedge funds, listed & unlisted shares and also have a certain amount of lock-in period. PMS services monitor and create a personalized portfolio for investors to lower the risk and maximize the returns. Portfolio Management Service funds, typically are liquid and do not have any lock in periods. However, both products tend to have high risk and high reward stances.

How can i Invest in PMS ?

Before investing in a PMS account, you will first need to establish a separate bank Demat account. Once the account is opened you will need to give a power of attorney to your portfolio manager over this bank account and Demat account. You will have the right to access these accounts and your portfolio manager will have to share a performance review of your investment once every six months.

Can a NRI Avail the Portfolio Management Service?

As per SEBI & RBI guidelines, NRIs can invest in a PMS account by opening a Portfolio Investment Scheme account. This has to be done through banks and other financial distributors.

How does Portfolio Management Service Work?
  • Portfolios are generally an accumulation of various investment funds. These include Equity, Mutual Funds, Bonds, etc. Based on the financial plan of the investor, the appropriate tool is used. Apart from gaining superior returns, investors seek to invest in a fund that is low in volatility.
  • The best PMS service provider in India employs seasoned professional fund managers to manage the PMS services. Investors use PMS services to avail themselves of the services of a portfolio manager’s advice and service to protect their money. The best PMS Fund offers investment solutions that are customized for their investors.
  • Once you decide on availing of PMS services, you will need to open a separate bank and Demat Account. Investments made in your name will be held in this Demat account and any dividend or return from the funds will be credited to your bank account.
  • Your portfolio manager will be the one handling the account and you will have complete access to the accounts as well. The movement of your investments will depend on what type of PMS service you choose to avail. According to SEBI guidelines, your portfolio manager will have to give a performance report at least every six months.
Who Should Invest in PMS Services?

The entire premise of a PMS service in India is to offer customized investment solutions. These solutions should not only cater to their financial needs but also align them with the financial plan of the investor.
High Net-Worth individuals who need a portfolio manager should ideally invest in the best PMS services in India. The main objective of the best PMS in India is to deliver investors with investment instruments that have high returns and help reduce risk factors.
According to SEBI rules, investors wishing to invest in PMS service need to invest a minimum of INR 50 lakhs and more.

What is the Taxability that applies?

When it comes to PMS funds, implications are the same as investors who are directly investing. Any gains or profits that arise from PMS funds are treated as normal capital gains. Equity taxations are applicable on the same.
For Equity investments held for less than a year are taxed at 15%. Long-term capital gains on the gains arising from PMS funds are taxed at 10% without indexation benefits.

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