Investors in India are increasingly interested in investing in PMS companies. PMS refers to Portfolio Management Services. PMS is helpful for individuals who desire greater control over their investments. PMS is different from mutual funds. It provides a more personalized and flexible method of managing funds. Let’s learn how these companies operate and the type of PMS returns in India you can get.
What is a PMS Company?
A PMS company manages a portfolio of clients. It develops a plan depending on the risk level of the client, the objectives, and for how long he wants to invest. The company purchases and sells shares or other assets in place of the investor. It makes all the choices after understanding the needs of the client.
This facility is for individuals with more investment. The minimum amount to initiate PMS in India is ₹50 lakhs. There are experienced professionals who run the portfolio. These professionals monitor the market daily and try to increase the wealth of the investor.
Types of PMS
There are two forms of PMS in India – Discretionary PMS and Non-discretionary PMS.
- In Discretionary PMS, the manager makes all the decisions. The investor is not involved in buying or selling.
- In Non-discretionary PMS, the manager provides advice. But the investor makes the final decision.
The majority of investors in India opt for Discretionary PMS since it is simple and faster. They rely on the manager to do everything.
PMS Returns in India
Now let’s discuss PMS returns in India. PMS returns can be greater than mutual funds. But they are also riskier. The returns are not guaranteed. They are based on how good the fund manager is and how the stock market performs.
As per SEBI data of recent years:
- Certain PMS schemes provided returns of 18% to 22% over a year.
- Some aggressive equity-based PMS schemes returned more than 30% per annum over the past three years.
- Conversely, some conservative schemes returned 8% to 10% per annum.
The returns also vary according to market movements and the sector invested in. For instance, a PMS that invested in pharma or IT during their growth phase returned excellent results.
Factors That Affect PMS Returns
Many factors influence PMS returns in India. Experience of the manager is a huge one. And then there is the approach employed that has a significant impact. There are approaches that target high-growth stocks. Other approaches prefer safe and stable stocks.
Market fluctuations also have an influence on returns. Therefore, one needs to have a long-term perspective while investing in PMS. Temporary losses are possible. But over a period of time, a good PMS can provide good returns.
Who Should Opt for PMS?
PMS firms are ideal for individuals who need tailored investment plans. It is not suitable for newbies. Individuals who already know the stock market can gain from PMS. If an individual has a high net worth and needs a smart method to increase wealth, PMS is an ideal option.
Final Thoughts
PMS returns in India have shown good growth over the years. But PMS is not risk-free. Before investing, understand your risk level and goals. Choose a manager with a strong track record. And always invest with a long-term plan.
With the right approach, PMS can help grow your wealth in a smart and planned way.
