pms suresh

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Prepared & Presented by

Suresh Ch. Panda( MBA, Finance)

PORTFOLIO

MANAGEMENTSERVICES(PMS)


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What is Portfolio Management

Services (PMS)?

Portfolio Management Services (PMS)

is an investment portfolio in stocks, fixed

income, debt, structured products and otherindividual securities, managed by a

professional money manager that can

potentially be tailored to meet specific

investment objectives.


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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.


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Investment Limit ?

As per SEBI guidelines, the

minimum investment required to open a

PMS account is Rs 5 lacs. ( Changed

to Rs. 25 lacs from Feb. 2013.)However, different providers

have different minimum balance

requirement for different products.

1. Birla AMC PMS- Rs 25 lacs

2.HSBC AMCPMS-Rs . 50 lacs

3. Reliance AMC PMS- Rs 1 core


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Objectives of Portfolio Management

1. Stable Current Return:-Once investment safety is guaranteed, the portfolio

should yield a steady current income.

The current returns should at least match the

opportunity cost of the funds of the investor.

2. Marketability:-

A good portfolio consists of investment, which

can be marketed without difficulty.If there are too many unlisted or inactive

shares in your portfolio, you will face problems in encasingthem, and switching from one investment to another.


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CONTD

3. Tax Planning:-

Since taxation is an important variable in total planning,a good portfolio should enable its owner to enjoy a favorable taxshelter.

The portfolio should be developed considering not only

income tax, but capital gains tax, and gift tax, as well.

4. Appreciation in the value of capital:-A good portfolio should appreciate in value in order to

protect the investor from any erosion in purchasing power dueto inflation.

In other words, a balanced portfolio must consist ofcertain investments, which tend to appreciate in real value afteradjusting for inflation.


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CONTD

5. Liquidity:-

The portfolio should ensure that there are enoughfunds available at short notice to take care of the investors

liquidity requirements.It is desirable to keep a line of credit from a bank

for use in case it becomes necessary to participate in right

issues, or for any other personal needs.

6. Safety of the investment:-Investment safety or minimization of risks is one of

the important objectives.

There are many types of risks, which are associatedwith investment in equity stocks, including super stocks.

You can try and minimize the overall risk or bring it toan acceptable level by developing a balanced and efficient portfolio.

A good portfolio of growth stocks satisfies the entireobjectives outline above.


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TYPES OF PORTFOLIO

MANAGEMENT SERVICES

TYPES OFPORTFOLIO

MANAGEMENT

Discretionary Non Discretionary Advisory


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CONTD.

1} Discretionary:Under these services, the choice as well as the

timings of the investment decisions rest solely withthe Portfolio Manager.

2} Non Discretionary:Under these services, the portfolio manager

only suggests the investment ideas.

The choice as well as the timings of theinvestment decisions rest solely with the Investor.However the execution of trade is done by the

portfolio manager.


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CONTD

3}Advisory:

Under these services, the portfolio

manager only suggests the investment ideas.The choice as well as the execution ofthe investment decisions rest solely with theInvestor.

Note: In India majority of PMS providers offerDiscretionary Services.


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How can an investor innvest in a

PMS?By cheque paymnent or

through transfering existing shares by the yby the

customer to the PMS account.Documents Required

PMS agreement with the provider.

Power of Attorney agreement.

New Demat account opening format. (even if he has ademat account).

PAN Card, Address proof, Identity proof etc.


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PMS CHARGESDecided at the time of investment and vetted by the

customer.1. Entry Load:- may have entry load of 3%.2. Management Charges:- Vary from 1% to 3 % depending

upon the provider. Charged quarterly basis from thePMS account.

3. Profit Sharing:- Some schemes have profit sharingarrangement in addition to fixed charges.Other Charges

Custodian fee.

Demat account opening charged. Audit charges. Transaction Brokerage etc.


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Working of PMS

Each PMS account is unique and the valuation and

portfolio of each account differ from one another.

There is no NAV for a PMS scheme. Howevercustomer will get the valuation of his portfolio on a

daily/weekly/fortnightly basis from the provider.

Each transaction will be considered as independenttrade and capital gain will be applicable on each

depending upon whether the relevant stock was held

short term or long term as per the prevailing tax laws.


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Recapitulation

PMS is an investment portfolio in different finacial

instruments.

Offered by registered entities like AMC & Brokerage houses in

India.

Minimum investment is 25 lacs & no maximum limit. Investment objectives-Liquidity, Safety, Stable returns, Tax

planning etc.

Opening of a PMS Account by cheque payment or transferring

securities. PMS charges are mutually agreed.

Unlike Mutual funds where you own units in PMS you own

individual securities.

Freedom & flexibility to tailor your portfolio to address your

preferences & financial goals..


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