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Frequently Asked Questions

Portfolio management Service (PMS) is an investment solution suited to high net worth investors. PMS aims to generate outperformance over the benchmark index. Its man advantage over MF is that it is customised to suit a client’s investment mandate and makes more concentrated bets than a mutual fund scheme which is often over-diversified.

Any individual/ entity falling under the following categories, is/are eligible to sign up:

  • Individual
  • Hindu Undivided Family (HUF)
  • Partnership Firm
  • Listed Companies
  • RBI approval required for NRIs, overseas companies and overseas Trusts
Our recommended time horizon for an equity portfolio is a minimum three to four years. Our asset allocation strategy is designed from a standpoint of optimising long-term risk-adjusted returns.
A portfolio manager is a body corporate, which, pursuant to a contract with a client, advises or directs or undertakes on behalf of the client (whether as a discretionary portfolio manager or otherwise) the management or administration of a portfolio of securities or funds of the client.
In discretionary portfolio management service, the portfolio manager individually and independently manages the funds and securities of each client in accordance with the needs of the client.
The portfolio manager is required to have a minimum networth of INR 5 crore.
SEBI (Portfolio Managers) Regulations, 2020 provide that the portfolio manager shall charge a fee as per the agreement with the client for rendering portfolio management services. The fee so charged may be a fixed amount or a performance-based fee or a combination of both. However, no upfront fees shall be charged by the portfolio manager directly or indirectly to the clients. The agreement between the portfolio manager and the client shall, inter-alia, also include the quantum and the manner of fees payable by the client for each activity for which service is rendered by the portfolio manager directly or indirectly.
Under Discretionary Portfolio Management Service (DPMS), Portfolio Managers shall invest funds of his clients in the securities listed or traded on a recognized stock exchange, money market instruments, units of Mutual Funds through direct plan and other securities as specified by Board from time to time. Under Non-Discretionary Portfolio Management Service (NDPMS), Portfolio Managers may invest up to 25% of the AUM of a client in unlisted securities, in addition to the securities permitted for discretionary portfolio management. “Unlisted securities” for investment by Portfolio Managers shall include units of Alternative Investment Funds (AIFs), Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts (InvITs), debt securities, shares, warrants, etc. which are not listed on any recognized stock exchanges in India.
The portfolio manager is required to accept minimum INR 50 Lacs or securities having a minimum worth of INR 50 Lacs from the client.
Clients of Portfolio Managers on-boarded before January 21, 2020 shall, in case of any top-up, comply with the requirement of new minimum investment amount and top up their accounts to minimum INR 50 Lacs.
The client may withdraw partial amounts from his portfolio, in accordance with the terms of the agreement between the client and the Portfolio Manager. However, the value of investment in the portfolio after such withdrawal shall not be less than the applicable minimum investment amount.
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Charges for all transactions in a financial year (Broking, Demat, custody etc.) through self or associates shall be capped at 20% by value per associate (including self) per service. Such limits shall apply separately for demat services, custodian services etc. Further, any charges to self/associate shall not be at rates more than that paid to the non-associates providing the same service. For instance, in case of Broking services, the total amount paid to the associate Stock Broker cannot be more than 20% of the total brokerage paid for trades on behalf of its clients during the year. If Portfolio Manager uses multiple Stock Brokers who are its associates, then transaction through each associate Stock Broker shall be capped at 20% of the total brokerage paid for trades on behalf of its clients during the year.
The performance of a discretionary portfolio manager is calculated using time weighted rate of return (TWRR) method for the immediately preceding three years or period of operation, whichever is lesser. SEBI Circular No. SEBI/HO/IMD/DF1/CIR/P/2020/26 dated February 13, 2020, interalia, provides information on reporting of performance by Portfolio Managers and also a client reporting format which includes information on the performance of the client account, portfolio manager and the appropriate benchmark.

The portfolio manager shall furnish periodically a report to the client, as per the agreement, but not exceeding a period of three months and such report shall contain the following details, namely: –

  • The composition and the value of the portfolio, description of securities and goods, number of securities, value of each security held in the portfolio, units of goods, value of goods, cash balance and aggregate value of the portfolio as on the date of report;
  • Transactions undertaken during the period of report including date of transaction and details of purchases and sales;
  • Beneficial interest received during that period in the form of interest, dividend, bonus shares, rights shares, etc;
  • Expenses incurred in managing the portfolio of the client;
  • Details of risk foreseen by the portfolio manager and the risk relating to the securities recommended by the portfolio manager for investment or disinvestment;
  • Default in payment of coupons or any other default in payments in the underlying debt security and downgrading to default rating by the rating agencies, if any;
  • Details of commission paid to distributor(s) for the particular client.
The portfolio manager provides to the client the Disclosure Document prior to entering into an agreement with the client. The Disclosure Document contains the quantum and manner of payment of fees payable by the client for each activity, portfolio risks, complete disclosures in respect of transactions with related parties, the performance of the portfolio manager and the audited financial statements of the portfolio manager for the immediately preceding three years.
The services of a Portfolio Manager are governed by the agreement between the portfolio manager and the investor. The agreement should cover the minimum details as specified in the SEBI Portfolio Manager Regulations. However, additional requirements can be specified by the Portfolio Manager in the agreement with the client. Hence, an investor is advised to read the agreement carefully before signing it.
Portfolio managers cannot impose a lock-in on the investment of their clients. However, a portfolio manager can charge applicable exit fees from the client for early exit, as laid down in the agreement subject to provision of SEBI Circular No. SEBI/HO/IMD/DF1/CIR/P/2020/26.
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Investors can log on to the website of SEBI www.sebi.gov.in for information on SEBI regulations and circulars pertaining to portfolio managers. Addresses of the registered portfolio managers are also available on the SEBI website. Information on monthly reports submitted by Portfolio Managers to SEBI can be accessed at https://www.sebi.gov.in/sebiweb/other/OtherAction.do?doPmr=yes