What is Portfolio Management Services (PMS) ?

The portfolio management services is a collection of investment instruments like shares, mutual funds, bonds, fixed deposits, other cash equivalents so portfolio management is the art of selecting the right investment tools in the right proportion to generate a good return from the investment made.

A portfolio is a group of assets generally, it is found that the risk attached to an asset is more than the risk of a portfolio, this is because portfolio gives an opportunity to diversify risk, diversification of risk does not mean that risk will be eliminated.

But with every asset, two types of risk are attached market and diversifiable risk, even an optimum portfolio cannot eliminate market risk, but can only reduce or eliminate the diversifiable risk.

Risk factor reduces, the variability of return reduces leading to better and assured returns, best portfolio management runs on the principle of minimum risk and maximum return within a given time frame, a portfolio is built based on investor’s income, investment budget and risk appetite keeping the expected rate of return in mind.

Types of Portfolio Management

1. Active Portfolio Management – The aim of the active portfolio manager is to make better returns than what the market dictates, those who follow this method of investing are usually contrarian in their approach. Active managers buy stocks when they are undervalued and start selling when they climb above the norm and find one with the necessary know-how, the value investing method will likely bring in good gains.

2. Passive Portfolio Management – Passive investing strategy, those who subscribe to this theory believe in the efficient market hypothesis, the claim is that the fundamentals of a company will always be reflected in the price of the stock. Therefore, the passive manager prefers to dabble in index funds which have a low turnover, but good long-term worth.

Business Objectives of PMS

      • When a portfolio is built, following points are to be kept by the portfolio manager based on an individual, the choice of one or more of these depends on the investor personal preference. Portfolio manager and their tasks involved in the management as below.

      • – Liquidity
      • – Tax Planning
      • – Customization
      • – Capital Growth
      • – Risk Minimization
      • – Consistent Returns
      • – Diversification of Risk
      • – Best Investment Strategy
      • – Marketability of Securities Invested in
      • – Security of Principal Amount Invested

    Investor need portfolio managers and professional services for the management of portfolio by as paying a pre-decided fee for these services.


Individuals, non-individuals such as HUFs, partnerships firms, sole proprietorship firms and corporate.

A portfolio manager is responsible for investment activities and decisions on behalf of individuals or institutions, and clients have invested their money with portfolio manager investment policy in order to invest for the fund, retirement needs, future liabilities or to meet the ongoing needs.

Existing portfolio of stocks, bonds or mutual funds to a portfolio manager that could be improved to client needs.

– Transactions & details of purchases and sales.
– Cash balance and overall value of the portfolio.
– The value of each security held in the portfolio.
– Expenses incurred in managing the portfolio of the client.
– Liquidity value of the portfolio & the number of securities.
– Beneficial interest, dividend, bonus shares, rights shares & debentures.

The investor is accessing the capital market directly, however, the investor should consult their tax advisor for the details, the portfolio manager ideally provides audited statement of accounts at the end of the financial year to aid the investor in assessing his or her tax liabilities.

Yes for investment in listed securities an investor is required to open a demat account with their own name.