In the Indian wealth management industry, Portfolio Management Services (PMS) have remained a niche investment product among High-Net-Worth Individuals (HNIs) seeking more than just the average returns.
With tailored strategies, direct ownership in securities, and better transparency, PMS fills the gap between traditional mutual funds and do-it-yourself (DIY) investing. As per SEBI, PMS providers in India collectively controlled more than ₹7.08 lakh crore assets as of FY25 Q1, demonstrating strong demand from high net worth investors.
Portfolio Management Services (PMS) is a SEBI-approved investment product managed by a registered portfolio manager wherein an investor's portfolio is professionally managed based on jointly agreed strategies, risk appetite, and objectives.
As compared to mutual funds, in which money is pooled from multiple investors, PMS portfolios are separately owned and managed, offering investors direct security ownership. SEBI guidelines stipulate the minimum investment in PMS to be ₹50 lakh, placing this product firmly in the HNIs space.
The portfolio manager in discretionary PMS has absolute freedom to make investment decisions for the investor.
This covers the selection of stocks, entry/exit timings, and asset allocation. Investors trust the manager's professional judgment in implementing the pre-decided strategy, without requiring prior approval. It is the most prevalent type of PMS and is suitable for individuals who prefer hands-off investment management.
In non-discretionary PMS, the portfolio manager makes investment suggestions and recommendations, but the investors themselves take the ultimate buy/sell decision. Active participation from the investor is necessary, as they need to approve each trade.
Non-Discretionary PMS is appropriate for experienced investors who desire control along with expert guidance. It is a combination of advisory services and client control.
In an Advisory Portfolio Management Service (PMS), the role of the portfolio manager is limited to offering investment advice, while investors retain full responsibility for execution and administrative tasks.
This model is ideal for investors who possess the knowledge and time to manage their own portfolios but value professional insights to guide their decisions. With Advisory PMS, investors maintain maximum control, having complete authority over all investment decisions and their implementation.
| Feature | PMS |
|---|---|
| Minimum Investment | ₹50 lakh (SEBI mandated) |
| Customisation | Yes, highly personalised |
| Ownership | Direct. Stocks/bonds in the investor’s name |
| Portfolio Size | Focused (15–25 securities) |
| Taxation | Investor-specific (based on realised gains) |
| Transparency | High. Real-time access to transactions |
| Control | Higher. Full demat access |
| Fees | Higher (management + performance fees) |
| Liquidity | Moderately liquid, with possible lock-in/notice |
| Risk Profile | Higher. Depends on strategy and market movements |
Here are some of the advantages which the investors should look for PMS
PMS portfolios are custom-made to match the financial objectives, risk appetite, and expected returns of investors.
Investors have individual stocks or securities in their demat account. It gives more control, especially when it comes to monitoring capital gains.
A regular detailed report on holdings, trades, and performance gives a picture and control to investors.
Since the portfolio is not shared, tax happens only when the investor makes a trade in his/her account, thus allowing better tax planning.
PMS schemes typically include 15–25 high-conviction stocks or assets, which allow that much more targeted wealth creation.
PMS is the right option for you if -
Following are some risk which the investors should keep in mind while opting for PMS
PMS portfolios are directly affected by the changes in the financial markets. Such changes can be caused by external factors like economic cycles, geopolitical conflicts, interest rate variances, or global financial events and can result in a great impact on the value of investments.
Generally, PMS strategies are usually centered on the narrow part of the market with focused portfolios containing 15 to 25 high-conviction stocks or securities.
Such a situation could improve the returns; however, it also means that the risk is higher if the selected securities or sectors perform badly. In addition, a lack of diversification could deepen losses in times of crisis.
PMS investments may be composed of securities that have lower liquidity, particularly in small-cap or thematic strategies. As a result, the exit from positions might be slower or done at a price that is different from what one desires, especially in times of volatile markets or in cases of urgent redemption.
A PMS success is to a great extent linked to the portfolio manager’s experience, judgment, and performance.
Even a small error in the strategy, the delay of decision-making, or the misjudgment of the manager among others could happen and definitely would negatively impact the performance of the portfolio.
It is important to assess the manager’s track record and consistency before investing, if one wants to be sure of his professional competence.
Portfolio Management Services (PMS) is a highly customised investment route for individuals with high capital and a requirement for tailored approaches.
But, as with every investment, PMS has its risks and calls for due diligence. You, as an investor with a long-term perspective, clear financial goals, risk tolerance and seeking a differentiated wealth creation model, can consider PMS as a viable next step.
