PMS is the acronym of a service called PORTFOLIO MANAGEMENT SERVICE. It is a SEBI registered intermediary with the primary objective to invest your money in Equity Markets.

Equities have historically outperformed all other investment vehicles over a long term. Equities create Wealth whereas Debt is useful in preserving wealth.

The benefits of PMS are as following:

• End-to-End Wealth Management Solution in Equities
• Personalised or Customised
• Absolutely ‘HASSLE FREE’

• Monthly reporting on Account Performance
• A Relationship Manager for Servicing Clients
• PMS on web whereby customers are given access to their account information on Website
• Quarterly Meeting with the Fund Manager

• You will have greater control over the asset allocation, whereas it is automatic in a Mutual Fund.
• The Portfolio can be customized to suit your risk-return profile.
• The Portfolio Manager has relatively greater flexibility to move in and out of cash as and when required depending on the market view.
• Typically, charges are lower and more transparent in PMS vis-a-vis a Mutual Fund.

Under the Portfolio Management Service, dividend cannot be paid. But if the companies in which investment is done declares dividend, then the proportionate dividend can be allocated based on logical holding. This dividend shall be tax-free. There can be an option to withdraw partially (subject to residual corpus not going below the minimum stipulated sum).

It is possible to make contributions / withdrawal subsequent to the initial corpus at regular intervals. There can be an option to withdraw partially (subject to residual corpus not going below the minimum stipulated sum).

There will be no charges for entry or exit load. The charges that can be levied are transparent and described in the documentation at the time of entering the scheme.

The discretionary portfolio manager independently manages the funds of each client in accordance with the needs of the client in a manner, which does not partake to character of a Mutual Fund. The client does not have any say over the decisions taken for the management of his / her portfolio. On the other hand, the non-discretionary portfolio manager only provides advisory services to the client where the client retains the decision-making powers in the portfolio.

As per regulations governing Portfolio Management Services in India, neither capital nor returns can be guaranteed.

Investment philosophy is as per objectives of a particular scheme. More attention is given to a company’s fundamentals, valuations and technical trends and lesser weightage to macro factors.

There is no lock-in period in Portfolio Management Service. It is possible to make withdrawals by simply putting in a request for the desired amount. It is however, prudent, to specify the minimum period of investment, at the time of signing the agreement. Thus, portfolios are designed in accordance to the needs. Investment in equity portfolio is preferred for a longer term as equities outperform most other asset classes in the long run.

The minimum size of Portfolio will be as per SEBI Regulations. As per SEBI regulations, the minimum size of the portfolio is Rs. 5 lacs.

There is no upper limit on the amount that can be invested in the Portfolio Management Service. But there could be restrictions on the maximum limit under certain schemes.

Initial corpus can be brought into the Portfolio Management Service by way of Cheque and / or securities / shares. The initial portfolio of securities / shares is re-aligned as per the model. The fund manager will sell shares as required to get the holdings re-aligned as per the model portfolio.

Net Asset Value (NAV) can be checked on a daily basis by logging on to our website. Monthly statements of transactions, holdings, etc. are provided typically within 15 days of the ensuing month.

All Portfolio Clients receive the following reports on a fortnightly basis:

• Performance Summary of Portfolios
• Holdings statement
• Realized gain/ loss statement
• Half yearly Review Report

No such limits can be specified. However at any time, a request can be made for withdrawal, either partial or full.

In Portfolio schemes Performance Fees are charged, which comprise of:

• Management Fees and
• Profit sharing

To know more on the fee structure you can get in touch with the concerned manager.

Performance fee will be charged for two reasons:

• Any PMS Scheme has an inherent cost structure, which will be taken care of with a defined fee structure. Fee structure is designed to ensure that a larger part of the fee will be charged subject only to the performance of the fund.
• World over, portfolio managers operate on a fee-based model comprising a fixed retainer and a share in profit. It also incentivises the Portfolio Manager since they have a stake in the profitability of the portfolio.

For the purpose of performance fees, profit is considered as Net Profit after all charges like management fee, brokerage, and custody related charges etc are taken into consideration.

Typically a custodial arrangement is done with the Demat division wherein all the shares pertaining to the relevant scheme are kept in a pool account opened in the name of the relevant scheme. The breakup of the shares held in each individual account is provided to the client in the Holding Statement. However it will also depend on the scheme. As per SEBI guidelines, a separate DP account is opened for NRI clients.

In Case of Discretionary Portfolio Management Services, the discretion to invest primarily will lie with the concerned manager. Any securities / shares handed over as initial portfolio are aligned to the model. Therefore, it is advisable that you should be handing over only those securities/shares, which you will be willing to sell and retain the ones you will want to hold.

If there is any IPO, which will present a good investment opportunity then investment in the relevant IPOs is done.

Under SEBI guidelines, it is allowed to invest in the Derivatives Segment only to the extent of the value of the portfolio. Clients are advised to read the Disclosure Document carefully before investing.

Although it is possible to invest in debt instrument, most of the portfolios will be invested in the equity markets. In the Customized Scheme, however, only after having decided the asset allocation based on the risk / return profile of the client will the portfolio be invested accordingly which could also include debt instruments in the proportion best suited to the client’s risk-return profile.

SEBI guidelines forbid any day trading activity by Portfolio Managers.

Losses cannot be legally shared as operations are on fee-based model comprising of a fixed retainer and a share in profit and no share in losses. Equity investments are always subject to market risk, which all clients should be aware of before investing in any PMS scheme.

It is the responsibility of the Client to deduct and pay T.D.S. to the Government Authorities.

A Permanent Account Number (PAN) has to be provided for investment in the PMS scheme.

Under the Portfolio Management Scheme, each transaction scheme is considered as an independent trade, and capital gains are applied on each trade depending upon whether the relevant stock was held long term or short term. 10% tax is proposed to be chargeable for Short Term Capital Gain and no tax is proposed to be chargeable on Long Term Capital Gains. In addition the relevant STT charges will also be applied. The Tax applicability would also be governed by individual states, business, other investments, etc. We would advice you to take your tax advisors opinion before investing.

There are two kinds of schemes under PMS –

• Pool Scheme: All the transactions in each individual stock are pooled together for execution and then allocated to individual clients at the end of the day on the weighted average cost (as allowed under SEBI guidelines).
• Individual Scheme: All the transactions are in the clients name and the securities will lie in the clients name in the Demat account that will be opened. Also the contract bills/notes will be in the client’s name thus ensuring that all clients get the benefit of a uniform rate to avoid discrepancies in portfolio performance. In this scheme clients will not be receiving Contract Notes/Bills. However, client will be receiving monthly Transaction Statements, which enables the clients to see the transactions done in their respective accounts. Furthermore, a chartered accountant certified accounts statement, details of all transactions, dividend, short term/long term gains, etc. is provided that will be meeting the accounting and tax requirements of clients.

It can be done in a situation where the rationale and the assumptions behind our investment idea will be diluted or non-existent.

Documents that will be required:

• PMS Agreement.
• Documents mentioned in the Form (as per KYC norms)

It will be possible to open a Joint Account and also specify the nominee under the PMS scheme.

The company is professionally managed by a team with an impeccable track record and is a profit making entity thereby lending safety to the customers’ money.

Subsequent withdrawals can be made even of securities at regular intervals.

No, it is not necessary to keep the day-to-day record of the transactions, as monthly reports of all the transactions that are carrying out will be provided.

As long as the scrips are liquid enough and are saleable in the market, they will be acceptable, else not.