What PMS is
Under a Portfolio Management Service the securities are bought and held in your own name, in your own demat account, rather than through units of a pooled fund. A SEBI-registered portfolio manager makes the investment decisions under an agreement with you.
The practical differences from a mutual fund are transparency and concentration. You can see every security you own and every transaction made. Portfolios are typically more concentrated than a mutual fund's, which raises both the potential reward and the risk.
Discretionary and non-discretionary
- Discretionary — the manager executes decisions without seeking approval for each trade. The majority of PMS assets are managed this way.
- Non-discretionary — the manager advises and you approve each decision.
Eligibility and costs
- The minimum investment prescribed by SEBI is ₹50 lakh. Individual managers frequently set higher thresholds of their own.
- Fees may be a fixed management charge, a performance-linked charge above a hurdle, or a combination. These are negotiated and disclosed in the agreement.
- Because securities are held directly, every transaction is a taxable event in your own hands — unlike a mutual fund, where rebalancing inside the scheme is not.
Who this suits
Investors with a substantial portfolio already diversified across asset classes, a horizon of several years, and the temperament to hold a concentrated portfolio through a period when it lags the index. It is not an entry-level product, and it is not a way to chase recent performance.