Best PMS in India: There are various securities available in the market. A novice investor may find it hard navigating through equities. Bonds, mutual funds, and their different types. In this article, we take a look at one such scheme in the stock market known as a Portfolio Management Service (PMS).
Here we take a closer look at what this investment scheme exactly is in order to understand it better and also the best PMS in India. Keep Reading to find out!
What is a Portfolio Management Service (PMS)?
A portfolio management service is a professional service managed by SEBI registered portfolio managers who invest on behalf of their clients who are willing to make a minimum investment of Rs. 50 lakhs. The PMS that is managed by portfolio managers are also further backed by research teams.
This segment basically invests on behalf of well-off individuals or HNO (High Net Worth) individuals. These schemes generally cater to wealthy investors who have a high-risk appetite and those who are looking for personalized investment solutions.
According to the Securities and Exchange Board of India (Sebi), PMS schemes in India manage as much as Rs 18.4 trillion under discretionary portfolio, Rs 1.4 trillion under non-discretionary portfolio, and Rs 1.91 trillion under advisory.
But Why Would Investors Choose PMS Over Mutual Funds?
Mutual funds also offer a variety of investment options like small-cap, mid-cap, large-cap, hybrid, etc to name a few. But then why would investors go for PMS?
The answer to this lies in the restrictions that Mutual funds have. To start with mutual funds invest in anywhere around 50 to 100 stocks. At this point, the benefits of diversification are more or less negated. To perfectly enjoy the benefits of diversification one must invest anywhere around 15 stocks.
A PMS portfolio manager sets a strategy along with the investors according to his goals and then according to invests anywhere between 15-25 companies. This is done to suit the investors’ requirements.
In a PMS unlike a mutual fund the shares the ones money is invested in are held in the investors’ Demat account itself. On the other hand in a mutual fund one invests into a collective pool of funds which is then invested into shares.
Here the investor owns units of the mutual fund and not the shares his money is invested in. Here the investment behaviour of other investors may also have an impact on other investors investing in it. PMS offers the perfect remedy for it.
Another advantage that PMS gives is a tailored portfolio to meet the investors’ requirements. In addition to this as economic situations change the strategy adopted by the managers can also change to help the investor achieve his goals. In addition to this, the Fund manager is also personally held accountable for his clients’ investments.
What are the Different Types of PMS Products?
There are 2 main types of PMS products i.e. Discretionary and Non – Discretionary. We take a closer look at them below:
Discretionary: Under Discretionary Portfolio Management Service the investment and also the timing of the investment is decided by the portfolio manager.
Non-Discretionary: Under Non-Discretionary Portfolio Management Services the portfolio manager only gives suggestions. Here the final choice to make those investment lies with the investor. Here the execution lies with the portfolio manager.
It is also important to note that every PMS scheme for each and every investor is different according to their needs.
What are the Tax Implications in a PMS?
Unlike mutual funds where the investor is only taxed as and when he exits a fund, investors in PMS are taxed on each and every trade made. This is because the shares are held in the investors’ Demat account and he is liable for the capital gains tax be it long-term or short-term.
Best PMS in India
Here we take a look at the top PMS based on the Assets under management:
|Portfolio Management Service (PMS)||AUM (In cr)|
|ASK Indian Entrepreneurship Portfolio||19799|
|Motilal Oswal - NTDOP||8776|
|Marcellus - Consistent Compounders||6199|
|White Oak - India Pioneers Equity Portfolio||5886|
|ASK India Select Portfolio||4606|
|Karma - Long Only India Public Equity||4463|
|Alchemy - High Growth Select Stock||3420|
|ASK Growth Portfolio||3290|
|Motilal Oswal - Value||2089|
|SageOne - Core Portfolio||1920|
The Indian market has several investment opportunities through various schemes. PMS definitely ranks amongst the top thanks to the flexibility and convenience it provides. It is obvious that the scheme is not accessible to everyone.
But perhaps that is what one should strive for i.e. is to have a portion of his assets managed by a PMS or to have not require a PMS even if one is eligible. That’s all for this post! Let us know what you think is the best PMS in India in the comments below. Happy Investing!
Aron, Bachelors in Commerce from Mangalore University, entered the world of Equity research to explore his interests in financial markets. Outside of work, you can catch him binging on a show, supporting RCB, and dreaming of visiting Kasol soon. He also believes that eating kid’s ice-cream is the best way to teach them taxes.