MEANING

What is Portfolio Management Services (PMS)?

Portfolio Management Services (PMS) is an investment portfolio in stocks, fixed income, debt, cash, structured products and other individual securities, managed by a professional money manager that can potentially be tailored to meet specific investment objectives. Who can offer PMS? PMS can be offered only by entities having specific SEBI registration for rendering portfolio management services. Currently in India PMS is offered primarily by asset management companies (AMCs) and brokerage houses.

MEANING
The art and science of making decisions about

investment mix and policy, matching investments to objectives, asset allocation for individuals and institutions, and balancing risk against performance.
Portfolio management is all about strengths,

weaknesses, opportunities and threats in the choice of debt vs. equity, domestic vs. international

History of Portfolio Management

Mc Farlan is the first person who planned the

approach of the portfolio management in the investment concerns.

Later various personalities developed this portfolio management. Portfolio Management is the responsibility of the senior member of the team in the organization. They are also called as the productive team of the company.

TYPES OF PORTFOLIO MANAGEMENT

TYPES OF PORTFOLIO MANAGEMENT

Discretionary

Non Discretionary

Advisory

Discretionary: Under these services, the choice as well as the timings of the investment decisions rest solely with the Portfolio Manager.

Non Discretionary: Under these services, the portfolio manager only suggests the investment ideas. The choice as well as the timings of the investment decisions rest solely with the Investor. However the execution of trade is done by the portfolio manager.

Advisory: Under these services, the portfolio manager only suggests the investment ideas. The choice as well as the execution of the investment decisions rest solely with the Investor. Note: In India majority of PMS providers offer Discretionary Services

OBJECTIVES OF PORTFOLIO MANAGEMENT

Stability of Income Capital Growth

Liquidity
Safety Tax Incentives

Present scenario of portfolio management services

SEBI fixing strict norms , only serious

players are going to enter in the business portfolio management service providers have to send their clients at least a quaterly report giving the status of their portfolio and the transactions that have taken place Managers have to send half-yearly reports to SEBI on their portfolio

 Portfolio management services comes

for a fee from a high of 7% of the amount invested to a low of around 3.5%, follow-up services charges extra SEBI directives put onus on the portfolio management service providers to take follow-up action in case shares are lost or damaged

Prospects of portfolio management services

At present few institutions providing this service in

proper professional manner

Size of the capital market, stock exchanges and

financial instruments increasing day by day

Size of the household savings increasing as the

income is going up.

Equity cult is spreading in rural areas too.

Foreign Investment Inflows

SEBI Registered Portfolio Managers

YEAR (as on march 31st) Number of Portfolio Managers

1999
2000 2001 2002

18
23 39 47

2003
2004 2005 2006

54
60 84 132

2007
2008 2009 2010

158
205 232 243