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What are Portfolio Management Services?

Investment portfolios usually consist of investments in a wide range of securities like stocks, bonds and cash equivalents. This combination depends on the investor's risk tolerance level, which affects the returns potential of the portfolio investments.

But, establishing a strong investment can be challenging especially if you are an amateur investor. It requires extensive knowledge regarding the market and the securities, to calculate the RRR (Return Risk Ratio- a calculation of potential benefits against potential losses) accurately.

Types of portfolio management services:

    • Discretionary: PMS gives almost a free hand to the portfolio manager to make the investment and portfolio decision on behalf of the investors, without consulting them. Currently, most companies offer discretionary PMS.
    • Non-discretionary: PMS is more advisory wherein the portfolio manager advises on suitable investments depending on the investor’s risk appetite and objectives. The decision to invest or not is left to the investor, but trade execution is done by the portfolio manager.

Once you opt for a PMS, a separate bank account and a Demat account may be opened in your name. All investments must be made in your name, and the shares are held in your name in your Demat account. The bank account is also credited with any gains or dividend payouts from the investments.

Your portfolio manager is given the power of attorney over this bank account and Demat account. However, you can access these accounts to check the status of your investments at any time.


Unlike mutual funds where fund managers have the right to invest the fund however they want, provided they can meet the client's demand at the time of maturity, portfolio managers either offer suggestions or can be entirely responsible for the investments. Also, your portfolio manager has to give you a performance report at least every six months as per the guidelines of SEBI (Securities and Exchange Board of India).

Minimum Investment Required in PMS.

PMS portfolio management providers have a minimum investment amount criterion beyond which they provide their services. It is very important to note that SEBI (Securities and Exchange Board of India) has regulated the PMS services in India. SEBI has specified the requirement of a minimum investment of INR 50 Lakhs by investors. For this reason, PMS Portfolio Management Services are very different from other investment advisory services. PMS services in India were announced in 1993 by SEBI. So, about thirty years ago, the minimum investment required to receive PMS Portfolio Management Services was INR 5 lacs. It was in 2012 that the minimum investment size was raised from 5 lac rupees to 25 lac rupees. Then, it was only a few years ago in 2019 that the investment size was further changed to 50 lacs, where it currently stands.