Frequently Asked Questions about Portfolio Management Services (PMS) investments in India
PMS Basics
Portfolio Management Services (PMS) is a professional financial service where a portfolio manager manages an individual's investment portfolio in securities according to agreed terms and conditions. In India, PMS is regulated by SEBI.
PMS offers personalized portfolio management with direct ownership of securities, typically for HNIs, while mutual funds pool money from many investors to invest in a diversified portfolio managed collectively.
Eligibility & Account
The minimum investment amount for PMS in India is typically ₹50 lakhs, as per SEBI regulations.
PMS is primarily designed for high-net-worth individuals (HNIs), trusts, family offices, and institutional investors.
Fees & Charges
PMS typically charges three types of fees: Management fee (0.5%-2.5% of AUM), Performance fee (10-20% of profits), and Brokerage charges.
Management fees are not directly tax deductible but reduce your overall returns which are then taxed accordingly.
Taxation
Taxation depends on holding period: STCG (held <12 months for equity) taxed at 15%, LTCG (held >12 months) taxed at 10% over ₹1 lakh exemption for equity.
NRIs investing in PMS are subject to TDS on capital gains and dividends as per Indian tax laws.
Performance & Risks
Returns vary based on strategy and market conditions. Historically, top PMS schemes have delivered 12-18% CAGR over long periods.
Key risks include market risk, concentration risk, manager risk, and liquidity risk.
Regulatory
While SEBI regulates PMS providers, investments are subject to market risks. Client assets are segregated from the manager's assets.
Your securities are held in a separate demat account in your name, so they remain yours.
Disclaimer: Mutual fund investments are subject to market risks. Read all scheme-related documents carefully before investing.
