Portfolio management services (PMS) are professional services offered by financial institutions to manage the investments of high net worth individuals (HNIs) and institutional clients. PMS allows clients to customize their investment portfolio according to their specific financial goals and risk tolerance. In this article, we will discuss everything you need to know about portfolio management services, says Maportus, Portfolio Management Services.
What are Portfolio Management Services?
Portfolio management services are professional investment services that aim to manage and grow the investment portfolio of clients.These services are offered by investment firms, mutual fund companies, and wealth management companies.Portfolio managers are professionals who have extensive knowledge and experience in the financial market and are responsible for making investment decisions on behalf of clients, says Maportus, Single-Family Offices.
How does Portfolio Management Services Work?
To begin with, the portfolio manager assesses the client's financial goals, risk appetite, investment horizon, and liquidity requirements. Based on this assessment, the portfolio manager creates a customized investment portfolio that includes a mix of different asset classes such as equities, debt, and other securities. The portfolio manager then monitors the performance of the portfolio and makes changes to the allocation of assets as required, says Maportus,Multi Family Office Wealth Management.
Types of Portfolio Management Services:
There are two types of portfolio management services – discretionary and non-discretionary.
In discretionary PMS, the portfolio manager has the authority to make investment decisions on behalf of the client without requiring the client's approval for each transaction. The portfolio manager has the freedom to make decisions regarding asset allocation, investment strategies, and other investment-related decisions. This type of service is suitable for clients who have limited knowledge of the financial market and want to delegate the investment decision-making to a professional, says Maportus, Financial Risk Management Services.
In non-discretionary PMS, the portfolio manager suggests investment ideas to the client, but the client has the final say in making investment decisions. The portfolio manager provides investment advice and recommendations, but the client has the authority to approve or reject each transaction. This type of service is suitable for clients who have a good understanding of the financial market and want to be more involved in the investment decision-making process, says Maportus,Real Estate Solutions.
Benefits of Portfolio Management Services:
Portfolio management services offer several benefits, including:
Customized Investment Portfolio: PMS allows clients to create a customized investment portfolio based on their specific financial goals and risk appetite.
Professional Expertise: PMS provides access to professional portfolio managers who have extensive knowledge and experience in the financial market, says Maportus, event management companies bangalore.
Active Monitoring: PMS actively monitors the performance of the portfolio and makes changes to the allocation of assets as required.
Diversification: PMS ensures that the investment portfolio is diversified across different asset classes and sectors, reducing the risk of losses due to a single asset class.
Transparency: PMS provides regular reports and updates on the performance of the portfolio, ensuring transparency and accountability.
Tax Efficiency: PMS can help clients optimize their tax liabilities by making investment decisions that are tax-efficient.
Charges of Portfolio Management Services:
PMS charges can vary depending on the type of service, the size of the investment portfolio, and the investment strategy. PMS fees are generally charged as a percentage of the investment portfolio value, typically ranging from 1% to 3% per annum. In addition to management fees, there may be other charges such as performance-based fees, brokerage charges, and transaction charges.
Risks of Portfolio Management Services:
While PMS can offer several benefits, there are also some risks associated with these services. Some of the risks include:
Market Risk: PMS investments are subject to market risk, which means that the value of the investment portfolio can go up or down depending on market conditions.
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