When you’re ready to grow your wealth beyond mutual funds, Portfolio Management Services offer a personalized approach to investing. But which type fits your financial goals? Let’s break it down.
What Are Portfolio Management Services?
Portfolio Management Services are SEBI-regulated investment services where professional managers create customized portfolios, with investors directly owning securities in their demat account. Unlike mutual funds where you own units, PMS gives you direct ownership of stocks, bonds, and other assets.
The minimum investment for PMS in India is ₹50 lakh, as per SEBI guidelines effective from January 2020. This threshold exists because PMS involves concentrated portfolios with higher risks and rewards.
According to recent data from SEBI, total assets under management in the PMS sector reached ₹7.08 lakh crore in Q1 FY25, growing at about 33% CAGR over the past decade.
Primary Types of Portfolio Management Services Based on Control
When choosing PMS, your first decision is how much control you want over investment decisions. Here are the three main categories.
Discretionary PMS: Full Authority to Your Manager
In Discretionary PMS, you hand over decision-making to the portfolio manager, who takes full responsibility for stock picking, allocation, and exit decisions once you agree on broad strategy and goals.
This works well if you:
- Trust your manager’s expertise
- Prefer a hands-off approach
- Want quick responses to market changes
- Lack time to monitor markets daily
The manager buys, sells, and rebalances your portfolio without seeking approval for each transaction. You receive regular reports but don’t control day-to-day choices.
Non-Discretionary PMS: You Make the Final Call
Non-discretionary PMS requires client approval for trades, with the manager suggesting moves but the investor making final decisions.
Think of this as teamwork. Your portfolio manager researches opportunities and recommends actions, but you approve every buy or sell order. This gives you more control but demands your active involvement.
Choose this if you:
- Want involvement in investment choices
- Have market knowledge and time
- Prefer collaborative decision-making
- Like reviewing options before executing
Advisory PMS: Just Recommendations
In Advisory PMS, the portfolio manager provides investment advice only and has no control over the portfolio, with the investor executing transactions independently.
Your manager acts purely as a consultant. They analyse your portfolio, suggest strategies, and recommend specific securities. You handle all transactions yourself through your broker.
This suits investors who:
- Want professional guidance without delegation
- Already have trading experience
- Prefer complete transaction control
- Need expert research and analysis
Portfolio Management Services Types by Investment Approach
Beyond control structures, PMS strategies differ based on how actively managers trade and what they’re trying to achieve.
Active Portfolio Management
Active portfolio management involves frequent buying and selling, with managers hoping to beat the market’s average returns.
Active managers constantly scan for opportunities. They might shift between sectors, trade based on market trends, or capitalize on short-term price movements. The goal is generating returns above benchmark indices like Nifty or Sensex.
This approach typically involves:
- Higher portfolio turnover
- More transaction costs
- Potential for superior returns
- Greater risk from wrong calls
Passive Portfolio Management
Passive portfolio management copies a chosen index such as Nifty or Sensex and stays on track, accepting steady returns.
Rather than trying to outsmart the market, passive PMS mirrors an index. When the index composition changes, your portfolio adjusts accordingly. This means lower costs and simpler strategies.
Benefits include:
- Lower management fees
- Reduced transaction costs
- Predictable performance aligned with chosen index
- Less dependence on manager skill
Types of Portfolio Management Services by Asset Class
Your PMS can focus on different asset categories depending on your risk tolerance and return expectations.
Equity PMS: Growth-Oriented Investing
Equity PMS focuses on investing in stocks and can be categorised by market capitalisation or investment strategy.
Stock-focused portfolios aim for capital appreciation. Strategies might include:
Large-Cap Equity PMS: Invests in established companies with market caps above ₹20,000 crore. Lower risk, steady growth.
Mid-Cap and Small-Cap PMS: Targets companies with higher growth potential but more volatility. Some PMS strategies focus on ‘Large & Mid Cap’ and ‘Mid & Small Cap’ combinations.
Value vs. Growth: Value PMS hunts for undervalued stocks, while growth PMS seeks companies with strong earnings potential.
Thematic and Sectoral: Concentrates on specific themes like technology, healthcare, or green energy.
Debt PMS: Stability and Regular Income
Debt PMS invests in fixed-income instruments such as bonds, government securities, and other debt instruments.
This conservative approach prioritises capital preservation and regular income. Your portfolio might include corporate bonds, government securities, or high-rated debt papers.
Ideal for:
- Investors nearing retirement
- Those seeking regular income
- Risk-averse individuals
- Portfolio diversification needs
Hybrid PMS: Balanced Approach
Hybrid PMS combines different asset classes, including equities and debt.
By mixing stocks and bonds, hybrid strategies balance growth and stability. The allocation shifts based on market conditions and your risk profile. This approach provides growth potential while cushioning against equity market volatility.
Multi-Asset PMS: Comprehensive Diversification
Multi-Asset PMS manages portfolios across multiple asset classes, including equities, debt, and other investments.
This goes beyond simple equity-debt mixes. Your portfolio might include commodities, real estate securities, gold, and international assets. The goal is spreading risk across uncorrelated assets.
Who Should Consider Portfolio Management Services?
PMS isn’t right for everyone. Here’s what you need to qualify and succeed.
Regulatory Requirements
SEBI permits individuals, HUFs, partnership firms, NRIs, Association of Persons, and Sole Proprietorships to invest in PMS, subject to KYC, AML, and PMLA compliance.
Practical Suitability
Meeting the ₹50 lakh minimum doesn’t guarantee PMS is right for you. Experts recommend PMS makes more sense when your total equity exposure is in the ₹2.5-₹5 crore range or above.
You should have:
- Long-term investment horizon (3-5+ years)
- Tolerance for market volatility
- Understanding of fee structures
- Willingness to hold concentrated positions
Snazzy Wealth, regarded by many as the best mutual fund distributor in India, helps investors evaluate whether PMS aligns with their financial situation and goals. Rather than pushing products, the team assesses your complete wealth picture first.
How Snazzy Wealth Approaches Portfolio Management Services
As AMFI-registered mutual fund distributors, Snazzy Wealth offers guidance across investment products including PMS. Based in Ahmedabad, the firm takes a holistic approach to wealth management.
The team at Snazzy Wealth understands that PMS is just one piece of your financial puzzle. They help you consider:
- Your current investment portfolio
- Tax implications of different strategies
- How PMS fits with other holdings
- Whether the timing is right for concentrated portfolios
By evaluating PMS alongside mutual funds, insurance, and other investment options, Snazzy Wealth ensures you make decisions that serve your complete financial picture.
Key Differences: PMS vs. Mutual Funds vs. AIFs
Understanding where PMS fits in the investment spectrum helps you choose wisely.
Portfolio Management Services: Direct ownership of securities, minimum ₹50 lakh, highly customised approaches
Mutual Funds: Investors own units, lower entry cost, less customisation
Alternative Investment Funds (AIFs): Minimum ₹1 crore investment, pooled structure, often less liquid
According to recent performance data, top-performing PMS strategies delivered significantly higher annualised returns compared to leading mutual funds over 3, 5, and 10-year horizons.
Choosing the Right PMS Provider and Strategy
With hundreds of PMS providers in India, selection requires careful evaluation. Consider these factors:
Track Record and Consistency
Look beyond recent returns. Examine performance across multiple market cycles. Did the strategy protect capital during downturns? How did it perform in bull markets?
Investment Philosophy
Rather than chasing a “top list,” apply a framework examining philosophy (is it coherent and matching your temperament?), people (experience across cycles, research depth), and process.
Fee Structure
Fees dramatically impact long-term wealth. Simple fixed-fee structures can retain more capital than performance-based models over time. Understand whether you’re paying fixed fees, performance fees, or both.
Transparency and Reporting
Your PMS provider should offer clear, regular reporting on holdings, transactions, performance, and fees. You own the securities, so you deserve complete visibility.
Manager Experience
Check the portfolio manager’s credentials, years of experience, and past roles. Have they navigated different market conditions successfully?
Tax Implications of Portfolio Management Services
Since you directly own securities in PMS, tax liability for the PMS investor is the same as directly buying or selling shares.
Equity holdings sold after one year qualify for long-term capital gains tax (currently 12.5% above ₹1.25 lakh annual gains). Short-term gains face 20% tax. Debt securities have different tax treatment based on holding period.
This direct ownership can enable tax-loss harvesting, where managers sell losing positions to offset gains. Unlike mutual funds, you control the timing of your tax events.
Recent Developments in the PMS Industry
The investment landscape keeps evolving. SEBI introduced Specialised Investment Funds (SIFs) effective April 1, 2025, with a minimum investment of ₹10 lakh, bridging the gap between mutual funds and PMS.
Additionally, the Association of Portfolio Managers in India has requested SEBI to lower the investment threshold for PMS to attract more investors. This could make PMS accessible to a broader audience if approved.
Common Mistakes to Avoid with Portfolio Management Services
Even sophisticated investors make errors when entering PMS. Watch out for:
Insufficient capital allocation: Investing exactly ₹50 lakh leaves no room for diversification across strategies or managers.
Chasing recent performance: Last year’s top performer might not repeat. Focus on consistent, risk-adjusted returns.
Ignoring fee impact: Small percentage differences compound significantly over years.
Wrong time horizon: PMS strategies need time to work. Withdrawing during temporary underperformance defeats the purpose.
Mismatch with risk tolerance: Concentrated portfolios can swing dramatically. Make sure you can handle the volatility.
Making Your Decision
Choosing between types of Portfolio Management Services depends on your unique situation. Ask yourself:
- Do I want to be involved in investment decisions, or prefer delegation?
- What’s my primary goal: growth, income, or balance?
- Can I handle concentrated equity exposure, or do I need stability?
- What’s my investment time frame?
- Am I comfortable with the fee structure?
Working with advisors at firms like Snazzy Wealth can help you navigate these questions. They bring experience across investment products and can provide objective guidance on whether PMS fits your wealth strategy.
The Bottom Line
The Working of Portfolio Management Services offer powerful customisation and potential returns for high-net-worth investors. The main types include discretionary, non-discretionary, and advisory structures based on control, plus active vs. passive approaches based on management style.
Asset class focus ranges from equity to debt to hybrid and multi-asset strategies. Each type serves different investor needs, risk profiles, and financial goals.
Before investing, ensure you meet not just the regulatory minimum but the practical requirements for success with PMS. Consider your total investible surplus, risk capacity, time horizon, and how PMS complements your overall wealth plan.
Whether you choose concentrated equity PMS for growth or balanced hybrid strategies for stability, the right type depends on matching the investment approach to your personal financial situation.
Frequently Asked Questions About Portfolio Management Services
What is the difference between discretionary and non-discretionary PMS?
Discretionary PMS gives full control to the manager for all investment decisions, while non-discretionary needs client approval for trades. In discretionary PMS, your manager acts independently within agreed guidelines. Non-discretionary PMS requires you to approve each transaction, giving you more control but demanding active participation. Choose discretionary if you prefer hands-off investing; select non-discretionary if you want involvement in each decision.
Can NRIs invest in Portfolio Management Services in India?
Yes, NRIs with up-to-date KYC and a demat account can invest in PMS through their NRE or NRO accounts. NRIs must complete compliance requirements including proper documentation and account setup. The minimum investment of ₹50 lakh applies equally to resident and non-resident Indians. Tax treatment may differ for NRIs based on their residential status and applicable tax treaties.
How do PMS fees work in India?
PMS typically charges through fixed fees, performance fees, or hybrid models. Fixed fees range from 0.25% to 2.5% annually on assets under management, regardless of returns. Performance fees take a percentage of profits above a benchmark. Analysis shows simple fixed-fee structures can retain more capital long-term compared to performance-based fee arrangements. Always understand the complete fee structure including hidden costs before committing.
What is the ideal investment amount for PMS beyond the minimum?
While SEBI sets ₹50 lakh as the minimum, PMS works better when your total equity exposure is ₹2.5-₹5 crore or above. This allows proper diversification across strategies and managers. Investing just the minimum limits your ability to spread risk effectively. Consider allocating 10-20% of your total equity portfolio to PMS rather than committing all funds to a single strategy.
Which type of PMS is best for high-net-worth individuals in India?
Discretionary or Hybrid PMS works well for HNIs who prefer active wealth management. The choice depends on your involvement preference, risk tolerance, and financial goals. HNIs with ₹5 crore+ portfolios often benefit from discretionary equity PMS for growth allocation while using debt or hybrid PMS for stable income. Working with advisors helps match the PMS type to your specific wealth situation and objectives.