LEARN · PMS
LEARN · PMS
A Portfolio Management Service is a personalised, professionally managed portfolio of stocks and bonds held directly in the investor's own name. A SEBI-registered portfolio manager invests on the client's behalf against an agreed strategy. The SEBI minimum is ₹50 lakh. The key difference from a mutual fund: in a PMS you directly own the underlying securities (in your demat), not units of a pool.
Open a PMS account and a dedicated demat, sign the agreement and fund ₹50 L+.
The portfolio manager builds and actively manages a concentrated portfolio, typically 15–25 stocks.
Securities sit in your demat; you receive detailed, transaction-level reporting.
The manager makes all buy/sell decisions within the mandate. The most common form.
The manager recommends; the client approves each transaction before execution.
The manager only advises; the client executes the trades themselves.
An annual management fee, typically ~1.5–2.5% of assets.
A share of gains (often ~10–20%) charged only above a hurdle.
The return level above which the performance fee applies.
Performance fee charged only on fresh portfolio highs — no double-charging on recovery.
₹50 lakh SEBI minimum — strictly an HNI / UHNI product.
The wide gap between the best and worst managers — why selection is decisive.
Because the investor directly owns the securities in a PMS, capital gains are taxed in their own hands on every transaction the manager executes — they are not deferred to a fund level the way a mutual fund's internal churn is.
Equity gains follow the standard equity rules: short-term (held under 12 months) at 20%, and long-term (12 months or more) at 12.5% on gains above the ₹1.25 lakh annual exemption. Dividends are added to income and taxed at the investor's slab rate.
The practical takeaway: an actively traded, high-churn PMS can trigger far more taxable events — and therefore a higher tax drag — than a buy-and-hold mutual fund, where the fund's own churn isn't taxed to you until you redeem. Always compare managers on post-tax, not just gross, returns.
| Feature | Mutual Fund | PMS |
|---|---|---|
| Minimum | ₹500 (SIP) | ₹50 lakh |
| Ownership | Units of a pooled scheme | Direct securities in your demat |
| Customization | Standardised | Tailored to the client |
| Taxation | On redemption; fund's churn isn't taxed to you | Per transaction, in your hands |
| Holdings | 40–60+ (diversified) | 15–25 (concentrated) |
| Cost | Lower (single expense ratio) | Fixed + performance fee |