Types of Portfolio Management Services

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By Admin Desk

What Are Portfolio Management Services?

Investments in a wide variety of securities, such as stocks, bonds, and cash equivalents, are common in portfolios. The mix of these is determined by the investor’s risk tolerance, which influences the portfolio’s return potential.

Portfolio Management Services (PMS)

PMS creates custom investment solutions for each customer based on their risk tolerance and financial capacity, ensuring the greatest possible return. Debt vs. equity investment, the risk to return balance, and, most crucially, the investor’s time horizon, or how long they are willing to invest, are all factors to consider.

An investment portfolio comprises an array of financial assets like stocks and bonds. So, why would you require the services of a financial professional?

It might be difficult to build a good investment, especially if you are a novice investor. To effectively calculate the RRR (Return Risk Ratio- a computation of possible benefits versus potential losses), significant knowledge of the market and securities is required. Portfolio Management Services can help with this.

Types Of Portfolio Management Services:

There are three types of PMS:

  • Discretionary

The fund manager decides how much to invest in discretionary portfolio management, and the customer has no say in the process. The client delegated portfolio management responsibility to the portfolio manager.

  • Non- discretionary

In non-discretionary portfolio management services, the portfolio manager can only recommend investment ideas to the client, but the customer has complete control over his or her investment selections.

  • Advisory

Investors are advised by portfolio managers, who assist them in making well-informed investment selections.

The deal is carried out by the investor.

When you choose a PMS, you have to open a separate bank account and a Demat account in your name. All investments must be made in your name, and the shares in your Demat account must be kept in your name. Any profits or dividends received from the investments are likewise deposited to the bank account.

This bank account and Demat account have been issued to your portfolio manager as a power of attorney. You may, however, go into these accounts at any moment to check on the status of your assets.

Active Vs Passive Management

Management of portfolios happens in two ways:

  • Active Investment Management:
    Active Investment Management

The primary goal of this strategy is to outperform the market index in order to create larger returns for the investor. As a benchmark, a specific index such as the Nifty or Sensex is used, and investment managers make active decisions on assets in order to beat the market.

  • Passive Investment Management:

This approach involves making decisions and tracking investments in a passive manner. The goal of this technique is to replicate the performance of a certain index. The index might be the Nifty50 or the BSE Sensex, and investment managers adjust the weightage of investments based on the index.


  • While active management offers better potential for returns, it also has a higher risk quotient.
  • Passive management has a lesser return potential than active management, but it also has cheaper management fees.

Opt For a Portfolio Management Service

Portfolios, like any other sort of investment, have a risk factor, but it is significantly smaller than other forms of investments. Any management service you choose to use will explicitly indicate the risks associated with the terms and conditions. To ensure your safety, check over the contracts attentively and make sure you understand every clause before signing up for anything.