PMS (Portfolio Management Service)
Definition
A professional investment management service where a qualified portfolio manager makes investment decisions on your behalf with discretionary or non-discretionary authority. SEBI mandates a minimum investment of Rs 50 lakh for PMS. PMS charges include management fees (1-2.5%), performance fees (10-20% above hurdle rate), and operating expenses.
Why It Matters
PMS offers customized portfolio construction that mutual funds cannot — concentrated positions, thematic bets, and direct stock ownership. However, the high minimum ticket, complex fee structures, and lack of standardized reporting make it suitable only for sophisticated investors. Compare PMS fees carefully — a 20% performance fee significantly erodes returns over time compared to a mutual fund with a 1.5% expense ratio.