Rini Goel asked on 31/03/2020

What are the benefits of investing in PMS?

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SBNRI Team
answered on 12/05/2022

Portfolio Management Service (PMS) is a unique and customized portfolio in stocks, fixed income, debt, cash, structured products and many other individual securities. PMS are managed by a professional money manager and can be tailored to meet specific investment objectives. The cost involved in a PMS is higher than in mutual funds because of greater customization in PMS as compared to mutual funds. Backed by an expert fund management team that is assisted by a research team, portfolio management services offer several benefits.

 

Benefits of investing in PMS

Key benefits of investing in PMS are:

Portfolio with benefit of discretion

Portfolio management services can be discretionary or non-discretionary. Investors can opt for discretionary PMS and give the fund manager free hand to execute transactions on behalf of the client based on their best judgment. Alternatively, if you opt for a non-discretionary PMS, all transactions have to be approved by you (client). Based on your unique needs and risk appetite, PMS creates a unique portfolio for you. This is not the case with a mutual fund that creates a single macro portfolio. 

Portfolio is customized to your risk appetite 

Although mutual funds are customized for your risk appetite, a PMS is unique in a variety of ways. It creates a unique portfolio for you to suit your needs. The portfolio is customized to meet your investment and liquidity needs over a period of time. Moreover, PMS also offers you additional services including realty services, will services, etc.  

Independent portfolio

The investments made through PMS are not dependent on the behavior of other investors. PMS has isolated individual holdings so one investor’s behavior doesn’t impact other investors’ contribution. The best part about investing in PMS is that the stocks are bought in your name making you the owner which is not the case in investments such as mutual funds.

Online top up

You can always add more funds to your investments and that too online. For example if you have a portfolio of 1 crore, you can add another 50 lakhs to it using the online services, through your NRE/NRO bank accounts.

Transparency and Superior Returns

Investing in a Portfolio Management Service has high chances of superior returns as the funds are structurally invested into opportunities with a high yield capacity. Also, the Portfolio Manager (people responsible for handling your account)  makes sure that transparency is maintained between the investor and the investments. No investments or sell outs are carried out without informing the investor about the same.

Transparent charge structure

Unlike Mutual Funds, charges are transparent in PMS. The deductions and other charges are clearly mentioned in the statements provided to the investor.

Diversify across equity, debt, REITS, structures, etc.

As compared to mutual funds, PMS offers a much larger area of diversification. Mutual funds have too many restrictions in terms of asset classes they can invest in. PMS, on the other hand, is a lot more flexible, investors can opt for products like real estate trusts, commodities, gold, ETFs, foreign assets, etc. Not only does this enhance returns but also mitigate risk as many of these assets have low correlation with equities. 

 

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At SBNRI, there are investment experts for macros, equities, debt, reality structures products, etc., to advise clients how to diversify their portfolios effectively and reduce their risk in the process. For any queries related to PMS, contact us using the button below. 

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