Portfolio Management Services: A Step-by-Step Guide

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Portfolio Management Advisory Service

Portfolio Management Service is a professional as well as licensed service provided by portfolio managers or investment advisory firms. It is regulated by SEBI (Securities and Exchange Board of India). Under portfolio management, tailor-made investment solutions are provided based on the client’s objectives, risk tolerance, and investment preferences. The portfolio management services are favored by many high-net-worth individuals (HNIs). The ticket size for availing portfolio management services is Rs. 50 lakh. Unlike mutual funds, there is no pooling of assets, here, every investor has a unique portfolio based on their risk tolerance & needs!

Portfolio management is backed by highly experienced and qualified portfolio managers who conduct research, analyze markets and trends, and accordingly make informed decisions. They monitor your portfolios, rebalance them, and make the necessary investment adjustments as per your needs!

How SEBI Regulates Portfolio Management Services in India

The portfolio management services in india are regulated by SEBI to ensure your interests remain protected and there is transparency between you and the service provider.

  • Strict eligibility criteria – To become a registered portfolio manager, individuals have to pass several eligibility checks like having a minimum net worth of Rs. 2 crores and 2 years of experience in the industry. This is required to ensure the manager is an expert and possesses the financial stability to manage investors’ funds.

  • Transparent fee structure – SEBI mandates managers fully disclose all costs associated with PMS so there is no hidden charge eating into your returns. There are also limits on the percentage managers can charge as management and performance fees.

  • Agreement under Schedule IV of the SEBI (Portfolio Managers) Regulations – This is a formal agreement between managers and investors that outlines the terms and conditions of the PMS. It includes important details such as the investment strategy, risk profile, fee structure, and the rights of both the portfolio manager and the investor.

Why Choose Portfolio Management Advisory Services?

Understanding why investment is important to you is vital before seeking any kind of investment advice. Here are some reasons why one should consider portfolio advisory services:

  • Diversification : By investing in a variety of assets across different industries, sectors, and regions, portfolio management allows for diversification. Diversification helps to reduce the impact of any single investment on the overall portfolio, thereby reducing risk.
  • Risk management : Through diversification, risk can be spread across different assets, which can help protect against unexpected events and market volatility. This approach aligns with the principles of risk management, as it aims to mitigate potential losses and promote overall financial stability.
  • Monitoring and rebalancing : In portfolio management, investments are actively monitored and periodically rebalanced. As a result, the portfolio remains aligned with the investor's goals and risk tolerance over time.
  • Long-term focus : Typically, portfolio management has a long-term focus, aiming to achieve sustainable growth. An investor's time frame and investment horizon are taken into account when creating a strategy.
  • Maximizing returns : A portfolio manager seeks to maximize returns within a given risk tolerance by carefully selecting investments and adjusting portfolio allocation accordingly.

Why choose fincart to avail portfolio management services?

We are among the best portfolio management services in India! Providing portfolio management services for over 20 years, we strategize & manage portfolios with a sustainable risk-adjusted return. In comparison to other portfolio management companies, we carefully evaluate your portfolio’s risk.

  • You are key to our success Our success depends on your success. We strive to make sure your finances are in good shape for this reason.
  • A personalized telephone-based service You can speak to real people, not an algorithm. Before you make any small investment, we will answer all your questions.
  • You are key to our success Your transactions can be tracked online. Our team is just a phone call away, so don’t hesitate to reach out to us!
  • Keep track of your progress Your investments will be reviewed, and we will tell you how they are doing in the market.
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How to Choose the Right Portfolio Management Service Provider

Here are a few things to be mindful of when looking at potential portfolio management services:

  • Review the PMS firm’s or the manager’s performance record to gauge how consistently they’ve delivered returns.

     

  • If you want to retain some control over your portfolio, make sure the service provider offers a non-discretionary portfolio management service. If you’re willing to delegate complete control to the manager, you can opt for discretionary PMS.

     

  • PMS fees can include management fees as well as performance-based fees. The management fee is a fixed percentage of the AUM and is charged regardless of how the portfolio performs. Performance-based fees are associated with the returns earned. Make sure you fully understand what kinds of, and how much fees your PMS charges.

     

  • Some PMS also charge an entry/exit load and have a lock-in period which you should carefully review before committing.

     

  • Ensure that the manager puts your needs first by creating a strategy aligned with your financial goals and risk tolerance.

     

  • Check testimonials and reviews to make sure the PMS is reputable and sticks to necessary regulatory requirements.

Portfolio Management Process - A Step By Step Guide

When it comes to getting portfolio management services from Fincart, our approach is simple. We follow a 3 step portfolio management process: 

Step 1: STRATEGIZE:

  • Establish direction by getting to know more about the client
  • Set strategy based on discussion

Step 2 : OPERATE A PLAN:

  • We analyze your financial condition based on your risk appetite!
  • Prioritize your goals and decide based on research about your way forward!

Step 3 : EXECUTION:

  • Quarterly reviews and monitoring are conducted to determine which funds perform best and which do not
  • We assess ongoing risk & focus!

Different Types of Portfolio Management Services

There are four different types of portfolio management services:

Active Portfolio Management

Active Portfolio Management is a proactive investment strategy where skilled Portfolio Managers actively make investment decisions based on in-depth research and market analysis. The goal is to outperform the market by strategically selecting and managing investments to achieve superior returns.

Passive Portfolio Management

Passive Portfolio Management, or index investing, is an investment strategy that seeks to replicate the performance of a specific market index instead of actively trying to outperform the market. Passive managers build portfolios that closely mimic the composition and weightings of the chosen index, aiming to match its returns.

Discretionary Portfolio Management

This kind of portfolio management services involve entrusting a portfolio manager with the responsibility of managing a specific investment portfolio. The manager makes investment decisions on behalf of the client, considering their objectives, risk tolerance, and investment horizon. In this approach, the portfolio manager has the discretion to choose and execute investment strategies they deem most suitable for the client’s portfolio.

Non-Discretionary Portfolio Management

When you invest in PMS through this kind, the portfolio managers offer investment advice and recommendations but the final call is yours. The clients retain full control over their investment decisions, and explicit consent is required for each transaction.

Personalized vs. Standardized Investment Approaches

In a personalized approach, the manager assesses your financial goals, circumstances, risk tolerance, and investment preferences, and builds a customized portfolio uniquely for you. A standard or systematic approach, on the other hand, is a lot more general in nature. The portfolio is structured in such a way that a standard approach can be applied to multiple investors with similar goals. Here, managers set pre-defined asset allocations and investment strategies, which they apply consistently across all portfolios following the same model with minor tweaks.

Benefits of Portfolio Management Services

Among the exquisite service itself, there are enormous advantages to portfolio management services for the needs of clients. Let’s get into the portfolio management services benefits:

Diversification of Risks

Portfolio management services spread your investments across various assets, reducing the impact of poor performance of any single investment on the overall portfolio, thereby minimizing risks.

Ensures Maximum Returns

PMS services aim to maximize returns by actively managing the portfolio. Professional portfolio managers analyze market trends, economic conditions, and individual securities to make informed investment decisions that seek to optimize your returns.

Active Monitoring & Customization

Portfolio managers continuously monitor the market and individual investments. They adjust the portfolio in real-time to capitalize on emerging opportunities or mitigate risks. Customization ensures that the portfolio aligns with the investor’s financial goals and risk tolerance.

Extensive Professional Experience

Portfolio advisory services are managed by experienced and qualified professionals who understand the complexities of the financial world. They use their knowledge about where to invest your money, increasing the likelihood of positive returns.  

 Diverse Investment Options

Instead of being limited to one or two types of investments, portfolio management services offer a wide range of options. This diversity allows you to invest in different areas, industries, or regions.

A Tax-Efficient Investment

Portfolio managers consider tax implications when making investment decisions. They aim to structure your portfolio in a way that minimizes your tax burden, ensuring that you keep more of your returns after accounting for taxes.

Why Diversification Matters in Portfolio Management

Investors should always strive to find the balance between risk and reward. While investing in a few securities can potentially generate high returns for you, it can also have a devastating impact on your portfolio. That’s why professionals offering portfolio management services prioritize diversification. It significantly reduces the risk that comes with relying too heavily on a single asset, sector, or industry. Portfolio managers make sure to structure your investments across different asset classes and industries to diversify your portfolio and minimize this risk.

Role of Technology in Modern Portfolio Management Services

Modern technology has changed how the financial industry works, and has naturally improved portfolio management services as well by making them more efficient and effective. Managers can use tools such as advanced data analytics and algorithmic trading to understand market trends, tweak their strategies accordingly, and make profitable trades. Evolving tools such as AI and machine learning also help managers take advantage of opportunities that humans can miss. You can also use easy-to-understand apps and dashboards to track your portfolio in real-time.

FAQ's on Portfolio Management Service

Portfolio Management Schemes refer to various strategies and approaches employed by portfolio managers to effectively manage investment portfolios. These schemes are designed to meet specific financial goals, risk preferences, and time horizons of investors. They can include strategies like active or passive management, discretionary or non-discretionary approaches, and various asset allocation methods like strategic or dynamic.

A Portfolio Management Plan is a strategic document that outlines the framework and guidelines for managing an investment portfolio. This plan is developed based on an investor’s financial goals, risk tolerance, and time horizon. The primary purpose is to establish a roadmap for making investment decisions that align with the investor’s objectives.

A portfolio management service is a professional service provided by an experienced portfolio manager to an investor. A mutual fund, on the other hand, is a professionally managed fund that pools the money of many investors.

PMS services can be offered by entities having SEBI registration. 

  • Lack of diversification
  • Neglecting risk management 
  • Chasing short-term performance
  • Neglecting regular portfolio review
  • Not seeking professional advice

Active portfolio management

Selling and buying securities is an integral part of active investment management. By buying and selling assets or securities extensively, one intends to outdo the market collectively. When the markets are moving upward, active investment management is the key to maximizing returns.

 

Passive portfolio management

A passive investment strategy involves fund managers or investors taking a laidback approach to investing. The goal is to replicate the performance of a benchmark index. Passive investment management aims to generate returns similar to benchmark indexes.

  • Active Portfolio Strategies
  • Passive portfolio strategies 
  • Aggressive Strategies 
  • Defensive Strategies

The risk management process identifies, assesses, and mitigates potential risks that could negatively impact portfolio performance. Portfolio managers employ strategies to mitigate identified risks. This may involve diversifying the portfolio across different asset classes, sectors, and geographic regions to reduce concentration risk. They continuously monitor the portfolio’s exposure to various risks and evaluate the effectiveness of risk mitigation strategies.

A portfolio manager seeks to maximize returns within a given risk tolerance by carefully selecting investments and adjusting portfolio allocation accordingly.


Portfolio management involves the active management of a collection of investments to achieve specific financial objectives, while asset management focuses on the management of individual assets within a portfolio, optimizing their performance and risk. 

Portfolio management takes a holistic view of the entire investment portfolio, while asset management focuses on maximizing the value of each individual asset.

We at Fincart Financial Planners do not charge any portfolio management fees in India. 

Fincart financial planners provide the best portfolio management services in India with over 20+ years of experience. 

Portfolio management involves the active management of a collection of investments to achieve specific financial objectives, while asset management focuses on the management of individual assets within a portfolio, optimizing their performance and risk. 

Portfolio management takes a holistic view of the entire investment portfolio, while asset management focuses on maximizing the value of each individual asset.

There is no maximum limit for investing in the portfolio management service, however, the minimum amount of the ticket size is Rs. 50 lakhs!

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