When you invest in the stock market on your own or are about to invest a large sum of money, you may have felt the need for guidance that can help you make educated decisions about how to invest in the stock market so that you can improve your returns while ensuring you don’t take more risk than necessary.
Portfolio Management Service (PMS) is the best place to go to in such situations. In this article, we’ll talk about the factors that will help you choose the best PMS in India. A portfolio is a group of various asset classes like stocks, mutual funds, bonds, real estate, and even commodities. These services by reputed and registered intermediaries not only help you decide what to do with your money smartly but also manage your portfolio for a fee.
What is Portfolio Management?
PMS services give investors access to experts who know what’s going on in the market and can help them make important investment decisions. Let’s look at what else they offer:
- They take care of every part of managing your portfolio.
- They are aware of your investment return expectations and investment preferences.
- They keep an eye on the market and allocate your funds with your needs in mind.
- They tend to make decisions that are supposed to be good for your wealth.
- They give you advice about what you should do in the stock market.
Characteristics of Portfolio Management Service
- SEBI regulates PMS service providers in India.
- Portfolio management service handles debts and equity.
- The minimum Portfolio management service investment, as required by SEBI, is INR50 Lakhs. A PMS provider may have a balance requirement higher than this threshold.
- Investors can choose from many model portfolios based on their financial goals and needs. If investors prefer, these portfolios can be modified to suit their requirements.
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Types of Portfolio Management Services
Portfolio management services can be broadly divided into three groups.
- Discretionary Portfolio Management Service
In discretionary PMS, the portfolio manager is essentially given complete liberty to determine how to invest and manage the portfolio on behalf of the investors without their input. Currently, the majority of businesses provide discretionary PMS.
- Non-discretionary Portfolio Management Service
Non-discretionary PMS is more like an advisory service in nature, with the portfolio manager recommending appropriate investments based on the investor’s objectives and risk tolerance. The investor makes the choice of whether or not to invest, but the portfolio manager executes trades.
- Advisory Portfolio Management Service
The portfolio manager provides portfolio recommendations, and it is the investor’s responsibility to implement the suggestions.
List of the Top PMS in India
Ranking parameters include a combination of returns, number of clients, charges, support and goodwill. Here are selected five that make it to the list of best PMS services in India.
- Porinju Veliyath Equity Intelligence PMS
- Motilal Oswal Next Trillion-Dollar Opportunity PMS (NTDO)
- Birla Sunlife PMS
- Kotak PMS
- ICICI Prudential Portfolio Management Services
- Porinju Veliyath’s Equity Intelligence PMS
- Porinju Veliyath’s Equity Intelligence is one of the best PMS in India. Equity Intelligence was formed in 2002. The minimum investment needed in this PMS is INR50 lakh. The fund manager decides when to buy and sell stocks in this discretionary PMS. No lock-in period means money can be withdrawn at any moment.
- In the last 5 years, this PMS has averaged 35% returns, outperforming Nifty 50 and BSE Sensex. This PMS has no entry or exit load.
- Equity Intelligence PMS charges 2% annually for managing funds. In addition, it charges a 10% share of returns above 10% per annum. Porinju Veliyath’s PMS is available to NRIs along with Indian residents.
2. Motilal Oswal Next Trillion-Dollar Opportunity (NTDO) PMS
- Next Trillion Dollar Opportunity is a PMS from Motilal Oswal (NTDO). This PMS is perfect for short- and medium-term, small- and mid-cap investors.
- NTDO’s annual management fee is 1%-2.5%. Audit, custody, and exchange costs are extra.
- NRIs can invest in Motilal Oswal’s PMS.
- Birla Sunlife PMS
- Aditya Birla’s AMC was founded in 2004. This PMS has 350+ clients and INR22,000 crore in AUM, ranking it among the top PMS in India.
- Birla Sunlife PMS’s minimum investment is INR50 lakh with a 1-3-year lock-in.
- PMS and the client consider a compensation scheme for management fees. If an investor withdraws investment within 12 months, there is an exit load of 1.2%-2.2%. There is no exit load after 12 months. Brokerage fees average 0.01%-0.06% of the transaction amount. Custodian fees are 0.25-0.45% of asset value and depository fees are 0.21-0.32%.
- Kotak PMS
- Kotak AMC PMS was founded in 2012 and is one of the country’s leading PMS suppliers. Like others in this list of best PMS services in India, Kotak PMS’ minimum investment is INR50 lakhs. This PMS service is discretionary in nature and invests in 10 – 25 stocks to achieve bigger returns.
- Kotak PMS has 5 products.
- Kotak PMS charges a 2.5% annual cost with no performance fees. Early exits incur 3%, 2%, and 1% exit loads.
- ICICI Prudential Portfolio Management Services (ICICI PMS)
- ICICI PMS is a top PMS in India and given the size and reach of its parent organization, this is hardly surprising. ICICI PMS offers many products and portfolios. Core & Thematic, Large Cap, Flexi Cap, Infrastructure, Export, Wellness, Absolute Return, Enterprising India Portfolio.
- ICICI Prudential PMS requires minimum investment of an INR50 lakh and has prepaid fee structure of 1.6% – 2.2%. Profit sharing is as high as 33%. In addition, there are custodian, depository and brokerage charges.
Also Read: – Best Growth Mutual Funds in India
Top PMS in India – Conclusion
PMS can be a great way to reach your investment goals, especially if you are an HNI. Retail investors are hindered from making equity investments through portfolio management service due to the minimum investment cap of INR50 lakh. This is a regulatory requirement that even the best PMS services in India can’t circumvent.
PMS must notify the client in a timely manner of any disclosures. But the general public cannot access these freely. Additionally, evaluating and analyzing the performance of various PMS products is difficult.
Because there are fewer investors and more customization options for large investors and high net worth individuals (HNI’s), Performance management services give investors greater flexibility over the structure of their portfolios than Mutual funds do. This flexibility does not come cheap, as PMS service providers charge higher fees compared to Mutual funds.