Here’s what you need to know about Portfolio Management Services

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Among the many investment vehicles available in India, mutual funds are arguably the most popular. However, many of us may also have come across ‘Portfolio Management Services’ that are offered to Indian investors by leading financial institutions.

While both mutual funds and PMS are essentially investment avenues, they differ significantly in their structure, management approach, and investor suitability. In this article, we will discuss what is PMS and the differences between PMS and Mutual Funds and try to answer the mutual fund vs. PMS question for potential investors.

  • Table of contents
  1. What is PMS?
  2. FAQs

What is PMS?

Portfolio Management Services are offerings from a professional portfolio manager or wealth management company. The investment strategy is comprehensively tailored to meet the specific needs and goals of individual investors. Unlike mutual funds, PMS investments are highly personalised, and the investment strategy is based on individual investor objectives, risk tolerance, and investment horizons. Thus, PMS investment portfolios are highly customised and created entirely as per an investor’s preferences or specific goals.

The expense ratios of mutual funds are lower compared to the cost of Portfolio Management Services. Since PMS investment involves a personalised approach for each investor, fund managers and AMCs charge a higher expense fee for extensive portfolio customisation.

Mutual funds have a low entry barrier as retail investors can enter a scheme with nominal amounts as small as Rs. 500. This makes mutual fund plans accessible to a wide range of investors with varying financial backgrounds. In contrast, fund managers and AMCs that offer PMS investment usually impose a higher minimum entry amount restriction since the regulatory limit is minimum Rs. 50 lakhs. Hence, Portfolio Management Services can be suitable for institutions and high net worth individuals who have the capacity to shell out the higher initial investment amount.

Both mutual funds and PMS are mandated by SEBI to ensure timely disclosures of holdings, performance reports, and regulatory and management changes. However, PMS may offer more detailed portfolio reporting as the fund managers seek to provide a personalised service. So, is PMS better than mutual funds?

PMS and Mutual Funds are investment vehicles that cater to different investor needs. Mutual Funds offer a standardised, relatively low-cost/low-entry investment product that is suitable for all investors who want a diversified portfolio. PMS investment, on the other hand, offers a highly personalised investment strategy tailored to an individual's specific needs and goals, albeit with higher management costs and a higher entry barrier.


What is the minimum investment amount for PMS?
The minimum investment amount for PMS depends on the outlook of the fund manager or Asset Management Company offering the services. However, the regulatory minimum threshold for investing in PMS is Rs. 50 lakhs.

Can I invest in both PMS and mutual funds?
Yes, investors can invest in both PMS and Mutual Funds. In fact, many investors use a combination of both to potentially achieve their investment goals.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
This document should not be treated as endorsement of the views/opinions or as investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document is for information purpose only and should not be construed as a promise on minimum returns or safeguard of capital. This document alone is not sufficient and should not be used for the development or implementation of an investment strategy. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision. Investors are advised to consult their own investment advisor before making any investment decision in light of their risk appetite, investment goals and horizon. This information is subject to change without any prior notice.