Why HNIs should invest in PMS

Kavya Balaji   /   December 10, 2020
HNIs should invest in PMS

Portfolio Management Services (PMS) are investment services offered to people having a large amount of surplus money. These are often preferred by High Networth Individuals (HNI) because they don’t have the time to manage their stock portfolio on their own and need professional management for their investments. So, PMS is where the portfolio of the investor is managed by a fund manager by their behalf. PMS consists of investments in stocks, fixed income products and structured products. Structured products are those that invest in derivatives (futures and options).

The portfolio manager is answerable to the investors as the investors’ money is managed for a fee. As per the latest Securities Exchange Board of India (SEBI) guidelines, the minimum investment for availing PMS services should not be lower than Rs. 50 lakhs. Here are the reasons why HNIs can opt for PMS.

Choose the one you need

There are many different kinds of PMS. One is discretionary where the portfolio manager will decide when and what investments should be made. Other is the non-discretionary PMS where the portfolio manager will provide the investor with investment suggestions. The investor needs to decide on making the investments. After the investor provides the consent, the portfolio manager will make the investments.

There is advisory PMS where only investment advice is provided by the portfolio manager and the investor will decide if and when he wants to make the investments. You can choose any of these PMS based on your financial needs.

Get a quality portfolio

Investors typically focus on price rather than the value of the investments. This means that most often they might choose low quality stocks that provide lower returns to the investors in the long run. Investors tend to sell stocks for profits and hold on to duds thinking their prices will rise. This isn’t the right strategy. This is the reason why PMS helps.

Investment firms that offer PMS have model portfolios that have withstood the test of time. The model portfolio will have different styles of investing and asset classes. Based on your risk profile and requirements, the portfolio manager will help you choose the right PMS. You can make an analysis of the past performance of the model portfolios using XIRR. Read this article to understand XIRR. So, you will get the opportunity to invest in quality stocks that are recommended by stock market experts.

Independent portfolio

While mutual funds gather money from thousands and thousands of investors, PMS products have lesser number of investors. For mutual funds, the redemptions of these investors have an impact on your portfolio. Since PMS products offer individual portfolio management and this doesn’t impact other investors.

Every investor will have their own way of investing and selling their investments in the PMS. You needn’t be bothered about what other investors do and their redemptions or investments have no impact on your PMS.


PMS products are more transparent than mutual funds. As an investor, you get to know how many calls went right and at what price each investment was bought and sold. Every trade call that the portfolio manager makes is known to the investor. This is not possible for mutual funds. Most PMS firms provide online information on the PMS portfolio and give monthly statements to clients. There are even firms that provide audited reports to clients at the end of every financial year. Even the expenses made by the PMS are transparent. Most firms provide details of charges for your portfolio and can be customised based on your requirements.

Participation in the investment

When you invest in PMS, you can get the opportunity to make investment calls and you can interact with the portfolio manager. You will be updated on important events such as bonus shares, take overs, share split, etc. You actually understand the investment calls that the portfolio manager makes because you get the information on the investments.

HNIs who have a huge investible surplus and strong risk appetite should consider PMS rather than mutual funds. You can choose PMS if it is different from the standard mutual fund products that are available. Interested? Wealthzi.com offers a host of PMS products just for you. You can explore them right here.

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