When one invests in a PMS, the investor owns individual securities unlike a mutual fund investor, who holds units of a scheme launched by Mutual Fund AMC's. Difference between a Portfolio Management Services and a Mutual Fund for an investor are listed below:
- Concentrated Portfolio.
- Portfolio can be tailored to suit the needs of investor.
- Investors directly own the stocks, rather than the fund owning the stocks.
- Administration of taxation is different in Portfolio Management Services and Mutual Funds.
There are broadly two types of PMS:
- Discretionary PMS – The investor has control over investment decisions, with the portfolio manager providing recommendations and advice for informed choices.
- Non-Discretionary PMS – Under this service, the portfolio manager only suggests the investment ideas. The choice as well as the timings of the investment decisions rest solely with the investor. However the execution of the trade is done by the portfolio manager.
Majority of PMS providers in India offer Discretionary Services.
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