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Portfolio Management Services

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In our yesterdays class, we were discussing about Mutual Funds

We said Mutual fund have experts who are good at stock picking

They get constant flow of money every month

Investments into their schemes are often held for the long term

As direct equity investors, we are able to mimic the above three points as follows:

1. Fundamental analysis and picking good quality stocks (restricting ourselves to Largecaps and Midcaps)

2. Doing monthly budget and deploying funds on a daily basis

3. Staying with the investments for longer durations, often for 1 year and above.

Like them, we are also diversifying, first with 1 stock, then to 5 stocks and then to 10 stocks max.

In todays class we will discuss about PMS

PMS = Portfolio Management System

PMS is similar to Mutual fund

Except that it is Wealth Management !

If u are rich and want to invest in equities, u can take a PMS account

Minimum investment: Rs 50 Lakhs

Wealth manager designs a scheme / plan exclusive for super rich people.

They will have few handful clients

They set some investments themes. Themes means certain flavour of stocks

There are several PMS companies in India.

They need SEBI approval to start their business but generally do not require SEBI approval to launch or offer schemes

I will give u an example

Motilal Oswal is a popular PMS

I will give example from their PMS

Scheme name: Value Strategy

Objective: The Strategy aims to benefit from the long term compounding effect on investments done in good businesses, run by great business managers for superior wealth creation.

  • Investment Strategy*

• Value based stock selection • Investment Approach: Buy & Hold • Investments with Long term perspective • Maximize post tax return due to Low Churn

Low Churn = Invest and hold. Doesn't do profit booking and enter into new stocks.

Benchmark: Nifty 50 Index Investment Horizon : 3 Years +

Generally, PMS have a fixed time horizon

They just buy and wait for 3 years

However, MFs buy and hold for as many years as they feel the company is a good one

How to buy sir

There are several PMS companies

If u call, they will fall on ur feet for ur money bag of 50 lakhs

they will allot some units and ask u to see them after 3 years

However, one problem with PMS is that, unlike in MFs, investors do not do SIP

They just give Rs 50 Lakh to the fund manager and will not talk till 3 years

Mostly NRIs

So if the fund manager does not do proper fund management, and if market falls deep, the scheme fails.

Another theme they have is: Next Trillion Dollar Opportunity Strategy

  • Strategy Objective*

The Strategy aims to deliver superior returns by investing in stocks from sectors that can benefit from the Next Trillion Dollar GDP growth. It aims to predominantly invest in Small and Mid Cap stocks with a focus on identifying potential winners that would participate in successive phases of GDP growth

This is a big riskier scheme


Because they invest in mid and small caps

Benchmark: Nifty Free Float Midcap 100 Index

Usually pms has very few equity investments all 100% of the pf is invested in just 6 or 7 schemes

Since it is not a public scheme, there is no mandate that they shd publish their full portfolio

Question: If invest 50L what will b return after 3 yrs.. say approximately

There is no guarantee of returns either because they are investments. No Savings.

Also unlike MFs they do not disclose their portfolios that much.

But they do beat Nifty returns at almost all times.

Question: Will they give details where will PMS coy put our money...

If Nifty gives 17% in a specified period, they would give 25% returns

Though the scheme holdings are not disclosed, they will invest as per mandate. Like say, within Nifty 100, Nifty 500 etc

From PMS, we shd learn that:

1. Good returns are possible even with a small portfolio if we invested in right stocks

2. Always try to beat ur benchmark. say Nifty 50, Sensex 100 etc

Everyday make a note of Nifty value and put in ur Excel sheet.

Update the closing prices of ur stocks in the Summary sheet

Closing price = CMP

Note down the money investment and ur portfolio value every day

Computer %age of P/L

Compare your portfolio returns with Nifty every day

Find out who is winning - Your PF or Nifty on a daily basis

This way, you can understand if your pf is performing better than or worse than Nifty.


The how will divide the returns from nifty etc among us

Now, understood MF and PMS?

Both have a little different styles of investing and working. And yet both beat the markets by a huge difference.

both invest in the same index and stock we know and track

yet they beat the benchmark index and bring in good returns in their own way.

So, understand that the number of shares we hold in our portfolio isn't important

The quality of stocks is important.

Discipline and consistency in investment plan is important.

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