Best Portfolio Management Services (PMS) in India
Portfolio Management Service (PMS) is professionally managed investment service where an individual need to invest a fixed amount that would be invested across various stocks by PMS experts for higher returns. If you would have invested Rs 25 Lakhs in Porinju Veliyath PMS 5 years back, your money would have grown to Rs 1.5 Crores by now. Similarly if you would have invested Rs 25 Lakhs in Motilal Oswal PMS 5 years back, your money would have grown to over Rs 1.25 Crores now. What are Portfolio Management Services (PMS)? Which are the Top and Best Portfolio Management Services (PMS) in India for 2020? How these PMS Services in India have performed in the last 5 years. What are services being charged by these PMS Services in India?
What is Portfolio Management Service (PMS)?
As individuals or institutions become richer, they prefer to have customized investment services for them. For this, some opt for Portfolio Management Services or PMS. These are the entities registered with the SEBI market regulator, and offer services to meet specific financial planning of the clients who have quite high potential to invest, say minimum of Rs 25 lakh. PMS have equity or debt options. Banks, brokers, independent investment managers or asset management companies generally offer these services. The service providers have different model portfolios to the investors which they choose according their financial goals. These models define the types of stocks in which the money would be invested.
There are two types of portfolios in PMS.
1) Discretionary portfolio – In this type of PMS, the service provider has the authority to take decisions, buy or sell stocks on the behalf of client.
2) Non-discretionary portfolio – The service provider can seek advice to the investor but the final decision or authority remains in the hands of investor only.
What are the benefits of PMS Services in India?
The following are the benefits of Portfolio Management Services (PMS).
1) PMS are more aggressive and have the potential to create higher returns. There is no limitation or extent to which you can invest in a certain stock.
2) There is hassle-free management and continuous monitoring of stocks along with in-depth research and study, which is not possible for an individual to manage at a large scale.
3) PMS holdings are isolated and not impacted by other investor s’ actions. In general, investors tend to buy in rising markets and there could be times of panic when they sell in falling markets. This would impact other investors also. But in PMS, you are the sole decision maker.
4) Generally speaking, people who manage their own portfolios buy less of quality and focus more on price rather than value (don’t you agree J). They have a tendency to sell when they make profits and hold on stocks that have depreciated their value. The experienced portfolio managers take wise decisions on your behalf as to which stocks are to be held in long run.
5) Unlike mutual funds, PMS Managers are directly accountable to the client who can seek justification especially in the case of discretionary portfolio.
6) The fee of the service providers is negotiable. Investors can negotiate for lower fees if the portfolio is huge. Mutual funds have fixed percentage fees irrespective of their amount.
Also Read: Top ELSS Mutual Funds to invest in India
Best Portfolio Management Services (PMS) in India for 2021 / Best PMS company in India
Here is the list of Portfolio Management Services in India.
1) Porinju Veliyath Equity Intelligence PMS
Incorporated in 2002, the company has grown into one of the highest buzzing PMS in India with strong value-picking genes. Porinju Veliyath is the founder of Equity Intelligence and is a stock market expert.
Minimum investment required is Rs 50 Lakhs in Porinju Veliyath EQ PMS.
The approx. returns in the last 5 years are 35% and last 1 year is 47%.
There is no lock-in period for the investments. You can withdraw any time.
There is no entry or exit load in this PMS.
Porinju Veliyath’s Equity Intelligence charges a fixed management fee of 2% per annum, and additional performance fees of 10% of the returns above 10% per annum.
If any investments under this PMS are sold within 1 year, there is tax liability of 15% on profits. If any investment are sold after 1 year, profits received are tax free. Dividends received in PMS for the stocks are tax free.
NRI’s can invest in this PMS on repatriation or non repatriation basis.
Porinju’s EQ PMS is considered as one of the best PMS Services in India.
2) Motilal Oswal Next Trillion Dollar Opportunity PMS (NTDO)
Motilal Oswal is an asset management company that provides PMS also in the name of Next Trillion Dollar Company (NTD). Its strategy is to deliver superior returns by investing in small cap and mid cap stocks.
Good for investors who want to invest for medium to long term (3+ years).
This PMS invests in 20-25 stocks.
Minimum investment required is Rs 25 Lakhs in this PMS. You can add minimum Rs.50,000 as a Top Up (additional investment) in any of your strategy accounts.
The approx. returns in the last 5 years are 32% and last 1 year is 19%.
They charge fixed fees and based on performance of the PMS.
NRI’s can invest in this PMS.
Motilal Oswal NTDO is considered as the 2nd best PMS Services in India which can be considered by invest in 2020-21.
Also Read: Best Midcap Funds to invest in India
3) Birla Sun life PMS
Established in 1994, Birla Sun Life Asset Management Company provides portfolio management services (PMS) with a whole range of investment products. They mainly target those businesses that are priced less than they ought to be and showing promise for high yields. There are different types of portfolios that are categorized according to minimum investment amount, time horizon, and your goal. The following are the portfolios-
a) Core equity portfolio – Minimum Rs 50 lakh of investment with a time horizon of 1 to 3 years.
b) Customized Debt Portfolio – Rs 25 Crores or as per SEBI regulations for a tenure of 3 months to 3 years.
c) Select Sector Portfolio – Rs 25 Crores or as per SEBI regulations for a tenure of 3 months to 3 years.
4) ASK India Select PMS
The ASK group / ASK Investment Managers is a leader in asset management, which caters to the interests of national as well as global investors. With strong research team and robust experts, it takes special care to minimize risk while extending quality growth. It offers a wide variety of asset classes, which include large cap, mid-cap, small-cap, multi-cap, value and growth and international assets.
a) Fixed fee – They would charge 2.5% of portfolio value as fixed fees pear year. This fee is charged separately from the actual expenses like brokerage fee, custodian expenses etc.
b) Performance-linked fee – There is a fixed fee of 1.5% of portfolio + along 20% of gains to be paid to them over and above 10% of profits.
There are some negative feedback by some of the ASK investment investors saying their investment has reduced within 1-2 years. As indicated, one should not check performance of PMS schemes in short term. Like mutual funds, even PMS has to be invested atleast for medium term of 3-5 years.
Some Important Facts and Limitations of PMS Services in India
1) PMS requires minimum of Rs 50 lakhs (as per recent guidelines in Nov-2019). Now, think how many people Invest more than Rs 50 Lakhs in mutual funds? Answer – Millions of investors. Why don’t they go and have a PMS instead?
2) A mutual fund house manages anywhere from Rs 1.5 Lakh crore to Rs 10,000 crore. In contrast there is hardly any PMS provider who manages more than Rs 4,000 Crore. why? Who do we think can have better fund management talent and practices?
3) A mutual fund is formed as a trust and does not pay taxes on short term capital gains, thus, can churn and try to generate alpha by not worrying about taxes as well as churning costs. Why would you want to pay capital gains tax of 15 percent plus surcharge on these in a PMS?
4) There are trustees, auditors and SEBI operational and investment risk management rules to ensure that investment process are fiduciary in nature. In simple words, you don’t have to bother about if the transactions were in your best interest. In PMS, while there is transparency to see what happened to your money, you may have to keep occupied in the data to ensure if what ever happened was in your best interest.
5) PMS can be tailored to individual risk profile which is not possible in MF.
6) PMS managers tend to churn your portfolio very often to book quick profits so that they can show that in their performance. By doing this, they also get more brokerage if PMS is from brokerage house.
7) PMS share only profits, but not the losses and this is biggest anomany.
8) There is certain minimum investment (about 15 Lakhs) and their target is usually high net worth individuals.
9) PMS cost is higher than MF.
10) PMS manager does not care about taxation (capital gains) and thus post tax returns can be lower if the PMS manager has churned the portfolio often which results in short term capital gains.
Should you opt for PMS Services in India?
My answer is NOT straight yes. PMS Services provide professional help in growing money by investing in stocks with an amount of Rs 50 Lakhs. However, mutual funds can also provide good returns in medium to long term. Selecting some of the top performing mutual funds can also achieve such goals. If you don’t have time and cannot do your own analysis and want to invest in investment schemes other than mutual funds, you can opt for Portfolio Management Services (PMS) in India.
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