Introduction
The term “Portfolio Management” refers to choosing and managing multiple investments to meet the long-term goals of financial gain while tolerating and reducing the client’s risks. The client can be a person, a company, or any institution. It requires a fundamental understanding of all the essential elements required for building the portfolio and maintaining it for successful allocation, diversification, and asset rebalance. The Portfolio Management Services in India is a facility to achieve a high rate of return within the optimum risk level. A portfolio manager usually provides it.
PMS Services in India
The acronym “PMS” refers to the Portfolio Management System. Portfolio Managers offer it. They have licensed professionals in the field of investments of assets. They are highly specialized in analyzing the various financial instruments of the market. They make better decisions regarding financial investments. Thus, they offer an ideal “PMS Service in India.” These services are provided according to the client’s net worth, ability to take risks, and requirements in terms of returns. Those managers ensure that the requirements of the returns of the investments and risk profiles coincide. The portfolios are constructed and managed by considering the following factors-
- The horizon of the investment
- The tolerance level of risks
- Liquidity of cash flows
- Taxation of the assets
Types of PMS in India
The country India has four main types of portfolio management services. Those are-
- Active Portfolio Management– This kind of PMS is sought by investors who want higher gains in capital. Such investors also have a greater risk-taking tendency. The portfolio managers diversify the investment options to adjust the risks. For this purpose, the portfolio managers select the stocks having low values and wait for the opportunities to sell those stocks at a higher price.
- Passive Portfolio Management– It involves copying the market’s index portfolios. Here, the portfolio managers focus on index funds. Those index funds are mutual funds. Their strategy is based on tracking and replicating the index portfolios of the stock market. It involves lower transaction costs because there is no need to manage the portfolio with activeness or continuous tracking.
- Discretionary Portfolio Management– In this type of portfolio management, the manager controls the clients’ portfolios. He can adopt any strategy of his choice to accomplish the objective of the investment. Here, all the decisions regarding the investment are taken by the manager. The client has to give complete authority to manage his portfolio along with investments and risks to the manager.
- Non-Discretionary Portfolio Management– This differs from the above PMS type. Here, the portfolio managers can only give ideas for investment. The decision to execute or reject the idea depends entirely on the client. The portfolio manager does not possess full authority over the clients’ portfolios. They can only suggest strategies to the client to gain profits. He has to work according to the orders given by the clients.
Conclusion
The PMS make effective investment strategies for their clients to meet their financial goals. The objectives of portfolio management services are to provide higher returns on the investments, reduce the level of risks, provide a steady income by protecting the capital of the investments, liquidity for the cash inflow, and offer high post-tax returns from all the investments of the client.
