Portfolio Management Services (PMS): A Brief Guide for Investors


Portfolio management services (PMS) are a customized investment management service that is offered to high- net-worth individuals (HNIs) and institutional investors. PMS providers manage a portfolio of securities on behalf of their clients based on their individual investment goals and risk tolerance.
PMSs offer a number of advantages to investors, including:

• Customization: PMS investments are customized to meet the individual needs of each client. This includes factors such as investment goals, risk tolerance, time horizon, and liquidity requirements.

• Flexibility: PMS investments are generally more flexible allowing the fund managers to create a portfolio that depicts their true view of the stock or macro environment

• Transparency: PMS providers are required to provide their clients with regular updates on their portfolio performance and investment strategy. New stocks added or sold are regularly known through monthly statements

• Accountability and Communication: Investors here prefer more direct interaction with the portfolio manager and get a sense of the portfolio and macro environment as a whole.

Time horizon:

PMS investments are typically made for a longer-term time horizon (3+ years). This is because PMS providers need time to generate alpha (excess returns over the market) for their clients.


PMS investments can be customized to meet the individual risk tolerance of each client. However, PMS investments generally involve a higher degree of risk than mutual funds. This is because PMS providers may invest in a wider range of asset classes and may use more aggressive investment strategies.


PMS providers typically charge a management fee and a performance fee. Management fees are typically charged as a percentage of the assets under management (AUM). Performance fees are typically charged as a percentage of the profits generated by the fund.


PMS investments are pass-through vehicles, meaning that the capital gains and dividends generated by the portfolio are passed through to the investors and taxed at their individual tax rates as Short-Term Capital Gains (STCG) or Long-Term Capital Gains (LTCG) depending on the holding time of the security.


PMSs are a good option for investors who have a high investment corpus and are looking for a customized investment solution. PMSs offer several advantages to investors, including customization, professional management, transparency, and accountability. However, it is important to note that PMSs also involve a higher degree of risk and fees than mutual funds.

Investors should carefully consider their investment needs and goals before choosing between mutual funds and PMSs. It is also important to consult with a financial advisor to get personalized investment advice.


This note is not meant for any advisory purpose and was made for an educational purpose. This should not lead to any influence on investors for any kind of investment decision based on this note. The investor must exercise independent due diligence for anything related to investment Though prepared carefully, we do not rule out the possibility of errors in this note. The above views are strictly for academic purposes and are not a reflection of what is a better investment vehicle.