Hi Guys..
Recently came to know about Portfolio management services(PMS) and was curious about a few aspects of it..
Plz share info about any of the aspects u guys know about pms.
1. Which are the best PMS providers in india
2.Wat is the minimum capital to start a PMS with various broking houses.
3.Wat is the expected return on the portfolio.
4.Is there any kind of security to investors?
5. wat are the charges of various PMS services .
The top (oldest) players are Kotak, ASK Raymond James, Prudential ICICI, Enam Securities, HDFC Mutual, Reliance Mutual, Birla Sun Life and Motilal Oswal .There is no way to compare them indeed to have to enquire in person about the specifics.
Minimum capital is 5 lakh.
Expected returns depends on the risk return profile that is selected.There is no security. Only this is to ensure that there is lesser fixed charges and that the charges for fund management are taken out from any capital appreciation that is managed from the capital invested.
There are various schemes and so charges are different. But generally there are 2 types I know of. Earlier there used to be fixed charges irrespective of the performance.This had no incentive (compulsion) to outperform. But some time back a new plan oof plan was introduced wherein the charges were made into 2 types-the minor amount was fixed and the major portion of charges were in the form of profit sharing. This was a win-win.
The above players are long time players.
Eventually since there is a fund manager employed it does seem that it is similar to a mutual fund. Only difference it that you choose to stay invested ,in mutual funds there may be liquidity pressures when people exit anticipating a market crash.
Points to note:
1. HNIS opt for PMS from multiple providers to spread risks and enable comparison of performance from different fund managers and also gives them a fair idea on fees being charged.
2. There is an unregistered PMS industry along with official one.
3. Though fund managers are charging a flat and a variable fee linked to performance, the churning in portfolios is leading to high costs which are loaded on the investor.So high networth investors (HNIs), are increasingly moving away from operators who churn their portfolios far too much for their comfort. Interestingly some move from the bigger brokerage to the smaller ones for this reason.
4. Typical Charges:
Market sources said that broking charges are as high as 0.50 per cent on each buy/sell transaction and increased churning adds to that much cost. Players said these costs are acceptable in a rising market when the investor is making money, but most HNIs are averse to churn.
Besides, they are paying high fees to fund managers for PMS. Fund managers offer the option of a fixed fee which ranges from 1 per cent to 3 per cent and/or a performance-based fee which can go up to 20 per cent and more of profits made. The investor still pays the minimum fixed fee even if the investor makes losses.