Portfolio Management

 

Portfolio Management Services (PMS)

Utilizing the expertise of a financial professional can be beneficial to an individual wanting to reach an investment goal or other financial objectives. However, it is important to know which types of services are provided by the financial professional. Although it is common to use the terms "portfolio management" and "financial planning" as synonyms, these staples of the financial services industry are not the same.

Portfolio management is the act of creating and maintaining an investment account, while financial planning is the process of developing financial goals and creating a plan of action to achieve them. Understanding the difference between the two may help in selecting the most suitable financial professional.
Professionals who perform portfolio management are focused on meeting the needs of investors through the rate of return achieved within a portfolio, and they are often responsible for rebalancing the account to remain in line with the investor's allocation preferences.


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What are the benefits of PMS?

  1. Professional Management: PMS provides professional management of portfolios with the objective of delivering consistent long-term performance while controlling risk.
  2. Constant Portfolio Tracking: We understand the dynamics of equity as an asset class, so we track your investments continue to maximize the returns.
  3. Risk Control: Well defined investment philosophy & strategy acts as a guiding principle in defining the investment universe. We have very robust portfolio management software that enables the entire construction, monitoring, and risk management processes.
  4. Convenience: Our Portfolio Management Service relieves you from all the administrative hassles of your investments. We provide periodic reports on the performance and other aspects of your investments.
  5. Transparency: You will get account statements and performance reports on a monthly basis. That’s not all; web access will enable you to track all information relating to your investment on daily basis. A password protected web login will enable you to access details of your investment on click of a button. The following portfolio reports are accessible online: 5.1 Performance Statements 5.2 Portfolio Holding Reports 5.3 Transactions Statements 5.4 Capital Gain/Loss Statements Along with it we also send half-yearly reports and yearly Audited reports for convenient Tax Filing.
  6. Dedicated Relationship Manager: Your Relationship manager will help you carefully understand your financial goals and advise you the right product mix. The relationship managers ensure that you receive periodic updates and account performance reports.
  7. Personalized Approach: In PMS, you gain direct personalized access to the professional money managers who actively manage your portfolio. This interaction may come in various different ways including in-person meetings, conference calls, written commentary, etc with the fund management team.

Whom to Offer?

In laymen, Portfolio Management Services are not available for ordinary customers of the bank and are offered on one to one basis. Unlike other schemes, Portfolio Management Services are not publicized or advertised by the bank, since the bank would like to retain the tag of “Exclusivity” but at TDS we do not believe in this mentioned tradition, we are here for all our client with same objective i.e. meeting their objective.

Why HNI’s opt for Portfolio Management Services

There is a famous saying that “It is easy to earn Money but very difficult to Manage”. Portfolio Management Services work on the same principle i.e. HNI’s job is to earn money and Money Management should be left to PMS. It's a known fact that Indians are very poor in financial planning & moreover as we move up the ladder we don’t have time for financial planning.


Service Charges

Service Charge for providing Portfolio Management Services. Fees can be fixed or commission in profits or Mix of both. It is advisable to opt for Portfolio Management Services which charge fees on profits. Under profit sharing, PMS fund will be more careful in managing the portfolio.

Myth of Assured Returns

Recently actress Suchitra Krishnamoorthi settled a case of mismanagement of her funds by very reputed MNC bank. SEBI found irregularities in Portfolio Management Services offered by the MNC bank. The actress claimed that the bank assured her return of 24% but due to mismanagement of funds, she incurred losses on 3.6 Cr investment. Though all banks offer assured return in Portfolio Management Services but there is no magical formula to generate double-digit assured returns. The confidence to provide higher returns stems from the fact that PMS funds provide very high flexibility to fund manager to manage the portfolio/fund. Value buying is the core theme for any PMS fund manager. He buys when everyone is selling & sell when everyone else is buying. It sounds very easy but its an art.

Limitations of Portfolio Management Services.

PMS fund cannot invest in certain investment vehicles like
1. Commodities
2. Derivatives (Leveraging)
3. Currency

Alternatives to Portfolio Management Services In my opinion, if you don’t wish to avail Portfolio Management Services than you may opt for following investment vehicles to manage your funds depending on your risk appetite
1. Index Mutual Funds
2. Fixed Maturity Plans
3. Debt Funds
4. Capital Protection Funds
5. ETF”s


Financial Planning

Financial planning is a more comprehensive process than portfolio management. Individuals going through the financial planning process often develop a plan aimed at meeting short- and long-term financial objectives, including building an emergency fund, saving for a new home or reducing debt, accumulating retirement assets and creating estate or tax efficiency. Financial planning may also include a discussion about portfolio management, but it is focused on what rate of return needs to be achieved to meet a specific goal or what allocation is most appropriate for an investor's risk appetite.

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