Portfolio Management Schemes (PMS) are investment services offered by professional portfolio managers or investment firms to manage the investments of high-net-worth individuals (HNIs) or institutional investors. Here’s an overview of PMS:
1. Customized Portfolio Management: PMS offers personalized portfolio management tailored to the specific investment objectives, risk tolerance, and financial goals of each client. Portfolio managers work closely with clients to design and implement investment strategies aligned with their needs.
2. Discretionary and Non-Discretionary Services: PMS may be offered in discretionary or non-discretionary formats. In discretionary PMS, the portfolio manager has full authority to make investment decisions on behalf of the client without requiring prior approval. In non-discretionary PMS, the portfolio manager provides investment advice and recommendations, but the client retains ultimate decision-making authority.
3. Diversified Investment Approach: Portfolio managers diversify clients’ investments across various asset classes, including stocks, bonds, mutual funds, exchange-traded funds (ETFs), and other securities, to achieve a balanced and diversified portfolio. The goal is to optimize risk-adjusted returns while minimizing portfolio volatility.
4. Active Management: PMS typically involves active management of client portfolios, with portfolio managers actively monitoring market trends, economic conditions, and investment opportunities to make timely investment decisions. This active management approach aims to capitalize on market inefficiencies and generate alpha (excess returns) compared to benchmark indices.
5. Risk Management: Portfolio managers employ risk management techniques to mitigate portfolio risks and protect clients’ capital. This may include asset allocation strategies, diversification, hedging strategies, and monitoring of portfolio volatility and downside risk.
6. Performance Reporting and Monitoring: PMS providers offer regular performance reporting and portfolio monitoring to keep clients informed about the performance of their investments. Clients receive detailed reports on portfolio holdings, performance metrics, transactions, and market outlook.
7. Fee Structure: PMS typically charges fees based on a percentage of assets under management (AUM) or a performance-based fee structure. Fees may vary depending on the level of customization, services provided, and the size of the portfolio.
8. Regulatory Compliance: PMS providers must comply with regulatory requirements imposed by securities regulators and other relevant authorities. This includes registration, disclosure, reporting, and compliance with fiduciary duties to act in the best interests of clients.
Overall, Portfolio Management Schemes offer a comprehensive investment solution for high-net-worth individuals and institutional investors seeking personalized portfolio management services, active investment management, and tailored investment strategies to achieve their financial goals.