What is Portfolio Management Services (PMS)?

PORTFOLIO:

As per SEBI Definition,
A collection of securities owned by an individual or an institution (such as a mutual fund) that may include stocks, bonds and money market securities.

In another words,
Portfolio (Investment Portfolio) is a collection of investments held by an Individual/ Institution. The collection of investments may be a combination of stocks, bonds and mutual funds, ETFs (Exchange Traded Funs like gold funds) etc.


PORTFOLIO MANAGER:

As per SEBI Definition,
A portfolio manager is a body corporate who, pursuant to a contract or arrangement with a client, advises or directs or undertakes on behalf of the client, the management or administration of a portfolio of securities or the funds of the client.

A portfolio manager may be a body corporate or an individual who manages the portfolio of the client as per agreement with the investor i.e. manages the portfolio of the investor with the objective set by the investor.

There are two types of portfolio manager:
• Discretionary Portfolio Manager: one who individually and independently manages the funds of   each client in accordance with the objective of the client.

• Non Discretionary Portfolio Manager: one who advices the client and manages the funds in accordance with the directions of the client.



PORTFOLIO MANAGEMENT SERVICES (PMS):

Portfolio management is defined as the management of a portfolio to enhance the value of the underlying investment to meet specified investment goals of the investor. Fund manager consider appropriate risk-reward level i.e. the return is set as per risk (high/ medium/low) appetite of the investor. It involves a proper investment decision with regards to what to buy and when to sell. This also involves proper money management.

The service provided by body corporate or an individual to manage individuals/ institutions/ fund portfolio as per agreement is called PMS.

The service provider is supposed to have professional experience/ expertise in portfolio management/ investment services and is responsible to take appropriate action to implementing investment strategy and managing the day-to-day activity.

By hiring PMS, an investor actually hires experience/ expertise to manage portfolio. It enables investors to promote and protect their investments that help them to generate higher returns.