Portfolio Management Services (PMS) in India are SEBI-regulated investment solutions for high-net-worth individuals (HNIs) with a minimum investment of ₹50 lakh. PMS offers customized portfolios managed by professionals, and charges typically include management fees (fixed % of assets) and performance fees (linked to returns, often with a high-water mark. PMS is a premium wealth management solution for affluent investors seeking customized, actively managed portfolios. While it offers flexibility and potential for superior returns, investors must weigh the high costs and risks before committing.
PMS is a professional service where a portfolio manager creates and manages a customized investment portfolio on behalf of clients. Unlike mutual funds, investors directly own the securities in their Demat account. Designed for HNIs and UHNWIs seeking personalized strategies beyond standard mutual funds. PMS assets under management in India reached ₹7.08 lakh crore in Q1 FY25, growing at a CAGR of ~33% over the past decade.
Types of PMS
- Discretionary PMS – Portfolio manager takes all investment decisions.
- Non-Discretionary PMS – Manager suggests investments, but client approves.
- Advisory PMS – Manager only advises; client executes trades.
Fee & Charges Structure
| Charge Type | Description | Typical Range |
| Management Fee | Fixed % of assets under management (AUM). | 1–2.5% annually. |
| Performance Fee | Charged if returns exceed a benchmark; often with a high-water mark (ensures fees only on new gains). | 10–20% of profits. |
| Setup/Exit Charges | One-time account opening or early exit fees. | Varies by provider. |
| Custodian & Brokerage Charges | Fees for holding securities and executing trades. | Nominal, transaction-based. |
Benefits of PMS
- Customization: Tailored portfolios based on risk appetite and goals.
- Transparency: Direct ownership of securities with detailed reporting.
- Professional Expertise: Managed by seasoned fund managers.
- Flexibility: Choice of strategies (equity-focused, multi-asset, thematic).
- Potential for Higher Returns: Compared to mutual funds, due to active management.
Things to Keep in Mind
- High Minimum Investment: ₹50 lakh entry barrier.
- Costs: Fees can significantly impact net returns; compare providers carefully.
- Risk: Portfolios may be concentrated; higher volatility than diversified mutual funds.
- Taxation: Gains are taxed like direct equity/debt investments in the investor’s hands.
- Regulatory Oversight: PMS is strictly regulated by SEBI, ensuring investor protection.