Portfolio Managements Services
What are the Portfolio Managements Services:- Portfolio Management Services ( PMS ), service offered by the Portfolio manager , is an investment portfolio in stocks, fixed deposit , debt, cash , structured products and other individual securities, managed by a professional money manager that can potentially be tailored to meet specific investment objectives.
What is Portfolio Management and its Objectives?:- Portfolio Management is the art of selecting the right investment tools in the right proportion to generate optimum returns with a balance of risk from the investment made. In other words, a portfolio is a group of assets. The portfolio gives an opportunity to diversify risk.
What do you mean by Portfolio Managements? :- Portfolio Managements is defined as the art and science of making decision about the investment mix and policy, matching investments to objective, asset allocation for individual and institutions and balancing risk against performance.
Is Portfolio Management is a Good Service ? :- Portfolio managements services works well when the services offered is highly customised. Othewise , Mutual fundare better option.... towards this end, some opt for portfolio management servces . or PMS, offered by various entities registered with the market regulator. PMS have equety and debt options.
What are the elements of portfolio Management?:- We find that most successful approaches include these four elements: effective diversification , active management of asset allocation , cost efficiency and tax efficiency.
- effective diversification
- Active Management
- cost Efficiency
- tax Efficiency
Types of Portfolio Management :-
Active portfolio management :- As the name suggests , in an active portfolio managemnts service, the portfolio managers are actively involoved in buying and selling of securities to ensure maximum profits to individuals.
Passive Portfolio Management :- In a passive portfolio management , the portfolio managers deals with a fixed portfolio designed to match the current market scenario.
Descretionary Portfolio Managemnent :- In Descretionary Portfolio Managemnent services, an induividual authorised a portfoilo managers to take care of his finacial needs on his behalf. The individual issues money to the portfolio managers who is turn take care of all his investment needs, papaer work, documentation, filling and so on. In decretionery portfolio managemnt , the portfolio manager has full rights to take decision on his clients behalf.
Non Descretionary Portfolio Managemnent :- In non discretionary portfolio management services, the portfolio manager can merely advise the client what is good and bad for him but the client reserves full right to take his own decisions.
PMS Vs Mutual Fund :-
It is natural for most of you to think if the PMS is so rewarding then why invest in equity mutual fund at all? That's a valid question. But we have to understand why one invests in mutual funds. The objective of equity mutual fund is to disregard the market cycles and keep on investing a certain amount on a regular basis in a disciplined manner. On the other hand, PMS is more time sensitive. Here the portfolio manager has to directly answer the clients and have to produce good returns regardless of how the markets are behaving. For making money out of markets you always need risk appetite and understanding of the market. So lets understand how these close competitors PMS and Mutual Funds are different from each other.
What are the benefits of PMS :-
Professional Management :
The service provides professional management of portfolios with the objective of delivering consistent long-term performance while controlling risk.
Continuous Monitoring :
It is important to recognise that portfolios need to be constantly monitored and periodic changes made to optimise the results.
Risk Control :
A research team responsible for establishing the client's investment strategy and providing the PMS provider real time information to support it, backs any firm's portfolio managers.
Hassle Free Operation:
Portfolio Management Service provider gives the client a customised service. The company takes care of all the administrative aspects of the client's portfolio with a periodic reporting (usually daily) on the overall status of the portfolio and performance.
Flexibility :
The Portfolio Manager has fair amount of flexibility in terms of holding cash (can go up to 100% also depending on the market conditions). He can create a reasonable concentration in the investor portfolios by investing disproportionate amounts in favour of compelling opportunities.
Transparency :
PMS provide comprehensive communications and performance reporting. Investors will get regular statements and updates from the firm. Web-enabled access will ensure that client is just a click away from all information relating to his investment. Your account statements will give you a complete picture of which individual securities you hold, as well as the number of shares you own. It will also usually provide:
Customised Advice :
PMS give select clients the benefit of tailor made investment advice designed to achieve his financial objectives. It can be structured to automatically exclude investments you may own in another account or investments you would prefer not to own. For example, if you are a long-term employee in a company and you have acquired concentrated stock positions over the years and have become over exposed to few company's stock, a separately managed account provides you with the ability to exclude that stock from your portfolio.
Who can invest in PMS :-Individuals and Non-Individuals such as HUFs, partnerships firms, sole proprietorship firms and Body Corporate.
Entry Load :-Many advisors offering PMS services have an entry load of around 2% to 3 % which is charged at the time of buying the PMS only. This is the initial charge by PMS.
Management Charges :-Every Portfolio Management Services scheme charges management charges. These are the fund management charges which vary from 1% to 3%. These charges are charged on a quarterly basis to the PMS account by the service provider.
Fixed Fee :-It is the flat fee which is charged by the PMS provider to the investors on a monthly, quarterly or yearly basis. This is not a percentage based fee. This fee is decided before availing the PMS by the investors. There are some PMS provider who decide this fee on the basis of the portfolio to be managed or assets or corpus to be handled.
Exit Load :-It is a fee which is charged by the PMS provider if you redeem the investments before the minimum investment period defined while availing the service.
Apart from the fees above, you may also incur brokerage charges each time a security is bought or sold.
Disclaimer :
Meghama Capital ( Meghama Wealth Management Services ) Only act as between client and the company inviting or Accepting Investment , known as principle company, Naither company,Employee certified the information provided by the Principle Company and shall not be liable under any condition.
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