Investing in the financial market can be complex, especially if you lack time, knowledge, or confidence. That is where Portfolio Management Services (PMS) step in. With a PMS, you can manage your investments efficiently and achieve good returns for your investments.
Think of having an investment expert at your disposal, making decisions for you.
Portfolio Management Services do that. PMS is a personalized investment solution offered by professionals called portfolio managers. These managers, with deep market knowledge, look at your financial goals, risk tolerance, and investment horizon to create a custom portfolio.
Now you may wonder, is the portfolio management service similar to a mutual fund?
Well, there’s a subtle yet distinctive difference. Unlike a mutual fund, a PMS crafts unique portfolios for each participant or client. It is not a one-size-fits-all portfolio for all unit holders. The threshold capital required to qualify for PMS usually is Rs. 1 crore, but smaller amounts are increasingly accepted as the industry becomes more mass-affluent, owing to technological innovations.
Let’s look at the types of Portfolio Management Services (PMS) and analyze the benefits of PMS
Different Types of Portfolio Management Services:
- Discretionary PMS: Here, you give control to the portfolio manager. They can make investment decisions without asking for approval. This brings flexibility and efficiency as they react quickly to market opportunities.
- Non-Discretionary PMS: If you want more say in your investments, this is for you. The manager suggests options, but you make the final call. This suits those who want to be more involved in decisions.
- Advisory PMS: It’s like having a financial advisor. The manager gives recommendations, but you have the last word. This type works well for those seeking guidance while keeping control.
PMS can be further divided into Active and Passive Management:
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Active Portfolio Management
In active portfolio management, the portfolio manager adopts a proactive approach, striving to maximise results through hands-on decision-making. This strategy delves into quantitative company analysis to assess their true value. Portfolio managers identify undervalued stocks, buying them and selling them as their value appreciates. Unlike the market hypothesis approach, these managers rely on ratios to support their investment decisions. Diversification across various sectors and industries is a hallmark of their strategy, aimed at reducing investment risk.
An adept understanding of the business cycle is crucial for informed investment choices. Active portfolio management is often favoured by investors with higher risk tolerance. These investors are willing to accept enhanced returns in exchange for heightened investment risk.
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Passive Portfolio Management
On the other hand, passive portfolio management takes a different approach. The primary objective here is to minimise risk while ensuring substantial profits for investors. Portfolio managers adhering to this strategy align with the efficient market hypothesis. This approach focuses on a company’s fundamentals to gauge its stock price. Investors inclined towards risk mitigation favour passive strategies. Moreover, this strategy consistently generates long-term gains.
Benefits of Portfolio Management Services
- Expert Knowledge: As a finance writer at Rurash Financials, you understand expertise matters. PMS gives you access to professionals who understand market trends, economic indicators, and investing strategies. They use this knowledge to navigate the market.
- Personalized Approach: Everyone’s financial situation is different. PMS takes this into account and creates a portfolio that matches your goals and risk tolerance. This personalized approach ensures your investments fit you.
- Saves Time: With your busy schedule, researching and managing investments can be tough. PMS takes this load off your shoulders. The portfolio manager handles research and day-to-day tasks, so you can focus on other things.
- Spreading risk: The first rule of investing is to spread risk. PMS experts diversify your investments into various types to reduce risk. This shields your portfolio from individual stocks or sectors’ ups and downs.
- Constant monitoring: Financial markets change a lot. PMS experts watch how your portfolio does and adjust it as needed. This keeps your investments in line with your goals.
- Managing Risk: How much risk you’re comfortable with matters. PMS managers look at your risk tolerance and build a portfolio that matches. This helps control potential losses.
- Special Opportunities: Portfolio managers know about investment opportunities that regular investors might not know. This gives your portfolio an edge by accessing unique markets and specialized options.
- Clear reporting: Transparency is the key to effective portfolio management. You get regular updates on how your portfolio is doing, what it holds, the transactions, and the costs. This builds trust and keeps you informed.
Experience the tailored advantages of investing with Portfolio Management Services (PMS) at Rurash Financials. We provide customized portfolios meticulously designed to suit diverse investors’ objectives, aligned with their risk appetite and investment horizon. With direct ownership of stocks in your demat account, you will have an intimate view of daily transactions, fostering transparency and control. These PMS portfolios, consisting of well-researched 15 to 20 stocks, ensure a focused approach to maximizing potential returns.