Definition
Portfolio Management Service (PMS)
A Portfolio Management Service is a SEBI-regulated, personalised investment service where a professional manages a wealthy client's portfolio, subject to a high minimum investment.
Under a PMS, a SEBI-registered portfolio manager invests on a client's behalf in stocks and other securities, tailoring the portfolio to the client's goals. SEBI sets a substantial minimum investment amount, making PMS suitable mainly for high-net-worth investors.
PMS can be discretionary (the manager makes decisions) or non-discretionary (the client approves trades). Securities are usually held in the client's own demat account, and the client bears the gains, losses and applicable capital-gains tax directly, unlike a mutual fund.
PMS offers customisation and direct ownership but typically charges higher fees (sometimes including performance fees) and carries market risk. Performance and cost transparency vary, so due diligence on the manager is important.
Related terms
- Alternative Investment Fund (AIF)An Alternative Investment Fund is a SEBI-regulated privately pooled vehicle for sophisticated investors, classified into Category I, II and III with high minimum investment thresholds.
- SmallcaseA smallcase is a ready-made basket of stocks or ETFs built around a theme or strategy that investors can buy in one click through their broker, holding the securities directly.
- Robo-AdvisoryRobo-advisory is automated, algorithm-driven investment advice and portfolio management delivered online, typically recommending and managing low-cost diversified portfolios based on your profile.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.