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Portfolio Management

PMS strategies give investors the desired freedom & peace of mind for their investments and feel assured. Within a short time, the offerings are already proving to be a winning choice for investors.

What is a PMS?

Portfolio management is an art of selecting the right investment policy for an individual having maximum returns and minimum risk. It is basically determining the weakness, strengths, threats and opportunities while choosing the right investment policy.

Portfolio management helps in managing an individual’s investments in the form of shares, cash, bond, mutual funds, etc. The portfolio is usually managed by a portfolio manager.

Types of Investment Services in PMS

Discretionary PMS

It is the one, where the Portfolio Manager individually and independently manages the funds of each client in accordance with the needs of the client. The Portfolio Manager takes all the investment decisions, executes and manages the administration of the portfolio.

Non-Discretionary PMS

Where the Portfolio Manager generally makes recommendations to the clients and investment decisions are made by the client. The Portfolio Manager merely executes and manages administration of the portfolio on the directions of the client.

Benefits of Portfolio Management

  • Professional management of your portfolio by experienced professionals.

  • Personalised focus on your unique portfolio.

  • Continuous monitoring and regular review of your portfolio.

  • Scope for customisation, personalised portfolios based on specific needs / objectives of the investors.

  • Hassle free operations with high standards of service and complete portfolio transparency / reporting.

  • Controlled risk owing to strong internal processes / systems in portfolio management and research driven approach.

  • Freedom from taking investment decisions and managing administration of portfolio.

Objectives of Portfolio Management

The main objective of Portfolio Management is to invest in securities in such a way that it maximizes one’s return and minimizes risks.​ Some of the important objectives of portfolio management are:

  • Tax planning: A good portfolio should allow an individual to get maximum tax benefits. In short, a good portfolio should offer an individual benefits on income tax, gift tax and capital gains tax.

  • Liquidity: A good portfolio should allow you to have access to funds at short notice. You may have to keep a line of credit from a bank in case you have to participate in any right issues or for personal requirements.

  • Investment safety: This is one of the most important objectives of a portfolio. A good portfolio should ensure that the investment is safe and secure. Other aspects such as growth and income can be considered only after the safety of the investment is ensured.

  • Growth in value of capital: A balanced portfolio should appreciate in value and protect the investor during inflation. It means, a portfolio should contain certain investments that appreciate in value after taking inflation into consideration.

  • Marketability: A balanced portfolio can be marketed without any issues. It is recommended that you invest in companies that trade actively and are listed on major stock exchanges. In case there are too many inactive shares, it will be difficult for you to switch from one investment to another.

  • Stable current return: A good and safe portfolio should generate a steady current(interest of dividends and not capital gains) income. The current income should at least match the cost of the investor fund.

Advantages of Portfolio Management

There are several advantages of portfolio management. Few of them have been mentioned below.


  1. Good investment choices: A balanced portfolio helps you get a holistic view of all your assets and allows you to identify any loopholes in your financial objectives. Portfolio Management allows you to take more informed decisions when it comes to making the investment.

  2. Track performance: A consolidated portfolio enables you to compare and track the performance of the assets. If any investment in the portfolio is not performing well, you can sell it and reinvest in a profitable investment.  Additionally, good portfolio management allows you to manage funds according to your goals.

  3. Balance rewards and risks: Some assets may be risky but rewarding while some may be safe but liquid. A few others may be safe and liquid but offer lower returns. To ensure that there is a right balance between various investments depending on your requirement, portfolio management is needed.

  4. Regular and disciplined investment: The main objective of portfolio management is to maximize returns. The best way to achieve this is by investing often. You can start by investing a small amount in a mutual fund through SIP. This way you can invest a fixed amount on a regular basis and help grow your funds.

  5. Manage liquidity: There may be instances where you will need funds urgently. Portfolio management helps you plan your investments in such a way that you can sell off your assets during such times.

  6. Readjust your investment: Proper portfolio management allows you to stay true to your goals. For instance, say you start your portfolio with 60% in equity and 40% in debt. In a few years, let’s assume that the equity performs well and say it occupies 70% of your portfolio.  In such a case, you can readjust your investment and bring it back to the original 60: 40 % ratio.

  7. Improve your financial understanding:  Portfolio management helps you to understand the financial market better. It not only helps you improve your market knowledge but also about investment and their interactions.

Why is portfolio management important?

Portfolio management is important owing to the following reasons.


  • It allows you to select the best investment depending on your income, age, risk appetite and budget

  • Portfolio Management helps in risk management

  • It allows for customization based on an investor’s choices and requirements

  • Investments can be planned by considering the changes in the tax laws

  • Portfolio management helps immunize the portfolio especially when you make investment in fixed income like debenture or preference share.

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