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Portfolio Management Service (PMS)

Overview

 

Portfolio Management Services (PMS) is a specialized service that offers a range of specialized investment strategies to capitalize on the opportunities in the market.

 

Investing requires knowledge, time, and the right mind-set. This is besides constant monitoring. PMS gives you professional managers who strategize to deliver you consistent returns keeping your risk appetite in mind. Every portfolio manager has a well-defined investment philosophy and strategy that acts as a guiding principle.

 

PMS relieves investor from all the administrative hassles of investments. You receive periodic reports on your portfolio performance and other aspects of your investments. Investments are tracked continuously to maximize returns.

 

In a PMS setup, your relationship manager defines your financial goals and advises you the right product mix. They give personalized service and ensure that you receive periodic updates and account performance reports.

 

What are the tax implications of investments in PMS?

At present, 10% tax is chargeable for short-term capital gains and no tax is chargeable on long-term capital gains. Securities transaction tax (STT) is also applicable.

 

What is Securities Transaction tax (STT)?

Securities transaction tax (STT) is imposed on securities exchange transactions under the provisions of the Securities Transaction Tax Act, 2004.

What are the advantages of investing in PMS vis-a-vis mutual funds?

You have greater control over the asset allocation in PMS, whereas it is automatic in mutual funds. The portfolio can be customized to suit your risk-return profile.
The PMS portfolio manager also has relatively greater flexibility to move in and out of cash as and when required depending on the market view.

 

What is the fee structure for PMS?

The fee structure depends from company to company.

The fee structure depends from company to company. There may be many options such as:

         A fixed proportion of the fund amount (for eg. 2% of the initial corpus)

         A fixed proportion of the fund amount + variable depending upon the performance of the portfolio (2% above 10% of the returns)

         Variable depending upon the performance of the portfolio

 

Can a NRI avail of the Portfolio Management Service?

PMS is open to all Indian nationals, resident or otherwise. NRIs will have to open a portfolio investment scheme (PIS) account in order to invest via a PMS.

PMS is open to all Indian nationals, resident or otherwise. NRIs will have to open a portfolio investment scheme (PIS) account in order to invest via a PMS.

 

What is a portfolio investment scheme (PIS)?

In order to invest in the secondary markets in India, NRIs need to obtain RBI permission. To do so, you have to open a Portfolio Investment Scheme (PIS) account with a designated bank. All transactions related to investments in the secondary market need to be routed through this account.

 

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