Structure of Portfolio Management Service:
➤ Portfolio Manager (PM):
A registered entity, typically a financial institution or a SEBI (Securities and Exchange Board of India) approved individual, responsible for managing the portfolio on behalf of the client.
➤ Client:
High-net-worth individuals or institutions availing the service.
Types of Portfolio Management Services:
➤ Discretionary PMS:
The portfolio manager has the authority to make investment decisions on behalf of the client without seeking prior approval for each transaction.
➤ Non-Discretionary PMS:
The portfolio manager provides investment advice, but the client retains the final decision-making authority for each transaction.
Pre-requisites For PMS:
Fees Structure:
➤ Management Fee:
A fixed percentage of the assets under management (AUM) charged annually.
➤ Performance Fee:
A percentage of the profits generated by the portfolio exceeding a predefined benchmark or hurdle rate.
In summary, Portfolio Management Service in India provides high-net-worth individuals with personalized investment solutions, professional management, and diversification across asset classes, aiming to achieve specific investment objectives while mitigating risks.
