Portfolio Management Services in India

Portfolio Management Services in India

A portfolio refers to a collection of investments such as stocks, shares, mutual funds, bonds, cash and so on depending on the investor’s income and budget.

Portfolio Management refers to the selection of securities and their continuous shifting in the portfolio for optimizing the return for a given level of risk and maximizing the wealth of an investor. In simple words, Portfolio Management is the art of selecting the right investments for the investor in terms of minimum risk and maximum return.

Objectives of Portfolio Management 

The objectives of Portfolio management are — 

(i) Safety of Principal: If Portfolio is properly managed by an investor then it enables an investor to keep the Principal amount safe and risk free. 

(ii) Stability of Income: It facilitates more accurate and systematic reinvestment of income, to ensure growth and stability in returns.

 (iii) Capital Growth: Portfolio Management helps in capital growth through purchase in growth securities. 

 (iv) Marketability / Liquidity:  It facilitates an investor to liquidate investments and take advantage of attractive opportunities in the market. It will help in increasing the income or return of an investor. 

(v) Tax Savings: It will also reduce the tax burden on income, so that the investor gains maximum returns from his investment.

(vi) Reduce Risk: It reduces the risk of loss of capital or income by investing in various types of securities and over a wide range of industries.

​​​How to start Portfolio management services in India?

Portfolio Management Services means the investment management services offered by a Portfolio  manager. A portfolio manager by using his expertise improves  the investor’s gains. 

Any professional portfolio manager whose net worth is Rs 5 crore or more can start Portfolio Management services by  following the below procedure:

(1) Register the company with Securities Board exchange of India (SEBI).

(2) For registration, a portfolio manager shall fill an application form and pay Rs 1 lakh non-refundable application fees.

(3) The fees shall be paid as a demand draft (DD) in favour of SEBI.

(4) Some additional information shall also be submitted. 

(5) The application form shall be posted to the Head office of SEBI (in Mumbai).

(6) For obtaining the certificate of registration, the applicant has to pay Rs 10 lakh as a registration  fee.

(7) This certificate is valid for 3 years.

(8) For the renewal of this certificate, applicants should apply for it before three month of expiry. Renewal fees is Rs 5 lakh.

Which is the most reliable PMS in India?

PMS means portfolio management services. The most reliable PMS in India is Motilal Oswal Portfolio management services

List of Top 5 Portfolio management services in India (PMS) 2021


Best PMS


Motilal Oswal PMS




Kotak PMS


ICICI Prudential PMS


Birla Sunlife PMS 

What are the hidden risks of investing in PMS in India?

(1) Not help in reducing Tax: In PMS, an investor gives authority to somebody for buying and selling of securities on a regular basis. All the transactions will be taxed accordingly. Some time Portfolio managers sell securities within 1 year which will be liable for short term capital gain @ 15%, which is very high.

(2) Risk of loss of invested money: Even the return on the amount invested in PMS is high but there is a risk for loss of capital. Standard deviation of PMS portfolio is 65% – 70% higher than that of mutual fund.

(3) Some PMS are very volatile and risky because they invest in micro-cap shares and have a very concentrated portfolio.

(4) Irregularity in return: If any person invests through PMS then he may face irregularity or less return on investment.

(5) An investor cannot invest through PMS by using a Systematic Investment Plan (SIP) like a mutual fund.

What are the Portfolio management strategies?

Portfolio Management strategies refer to the methods that are applied for the efficient management of portfolio and generate high return as possible on investments.

The following is the strategies for Portfolio management:

(1) Active Portfolio Management Strategy: This strategy relies on the fact that a specific style of analysis or management can generate returns that can beat the market. It focuses on taking advantage of market inefficiencies. The Active Portfolio Strategy involve the following method of selecting share:

(a) Bottom – up approach: In this approach, a portfolio manager will ignore market conditions and expected trends. The evaluation of a company will be done on the basis of their financial statement, strength of their product pipeline or any other criteria. It stresses the fact that strong companies will perform well irrespective of the prevailing market condition and trends.

(b) Top Down approach: In this approach, an investor will observe the market condition and decide industries and sectors that are expected to perform well in the ongoing economic cycle. On the basis of the above investigation, stock and shares will be selected.

(2) Passive Portfolio Management Strategy: This strategy relies on the fact that markets are efficient and it is not possible to beat the market return over a regular time. The Passive Portfolio management strategy involves the following method of stock selection:

(a) Efficient market theory: This method is based on the fact that the market information which affects an investor must be taken into consideration while evaluating the price of share and stocks.

(b) Indexing: According to this method, indexed funds are used for taking the advantage of efficient market theory and for creating portfolios.

What is the Portfolio Management process?

Process of Portfolio Management involves many interrelated phases which are given below:

(1) Specification of investment objectives
(2) Choice of assets mix
(3) Formulation of Management Strategy i.e. which strategy has to be followed while managing the Portfolio.
(4) Selection of Securities
(5) Portfolio execution
(6) Portfolio revision
(7) Portfolio evaluation i.e. performance of a portfolio is assessed over a stipulated time.

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