How To Select The Right Portfolio Management Services?

Portfolio management services or PMS is a relatively new investment avenue in India. Regardless, it has managed to gather ample attention from new and seasoned investors alike.

To maximise this investment avenue’s perks, investors must become well-versed with its associated features and limitations and then pick a provider that helps cater to their needs perfectly.

Since PMS is still a nascent concept, investors often lack the approach to pick the best service provider. With KredX, investors can simplify the process significantly and get in touch with SEBI-registered portfolio fund managers in no time. 

Regardless, following a few tips to select the right portfolio management services could help make the entire process more worthwhile and less tedious.

Tips To Select The Right Portfolio Management Service

By following these strategies, investors can select the most suitable portfolio management services per their requirements. 

Tip 1: Check The Investment Approach

Leading PMS providers tend to follow the principles of growth and value investing. However, this may not suit investors with a conservative approach. They may want to look for portfolio management service providers who focus more on capital preservation and do not prioritise absolute market capitalisation. 

Sometimes, managers may pick contrarian or uncommon stocks. Investors should find out whether they have ample room for growth or the potential to deliver decent yields in the long term. 

Tip 2: Find Out About The Cost Structure

Investors have to account for multiple charges when opting for portfolio management services. The cost structure and charges levied by PMS will help make an informed choice. 

PMS’s common charges include entry charges, profit sharing charges, and management fees. Often PMS providers charge an entry load fee of nearly 3% and management fees between 1% and 3%. However, the percentage varies as per the PMS provider. 

Tip 3: Factor In Portfolio Size Or Scope Of Diversification

Investors should look for PMS providers that offer a larger scope of diversification. Usually, top PMS providers provide investors with the flexibility to invest in products like commodities, foreign assets, REIT, gold ETFs, etc. This helps generate greater returns and, at the same time, cushions risks. Hence, when looking for a suitable PMS provider, investors need to carefully check the portfolio’s composition and room for diversification.

Tip 4: Check The Performance Record

Investors must check the track record of a PMS provider to determine whether it will be able to meet their investment objective or not. Investors should review the return rates offered over a significant period, say, 5 or 10 years, to gain a better insight. The fact that PMS providers are mandated by SEBI to disclose all transactions, charges involved, and client portfolio makes it easier for investors to determine their performance and associated transparency.

Tip 5: Check The Credential Of PMS Provider

It is always wise to opt for a PMS provider that has extensive experience in the field. Investors should also focus on a provider’s market reputation and reliability to gain an overall idea of what to expect from the portfolio management service provider. 

Likewise, finding out the number of clients will also help estimate the market presence and goodwill successfully. Generally, a PMS provider with a higher number of clients is considered more reliable than others. 

Besides these, it is also wise to look for a PMS provider with a reputation for providing world-class services and timely support. Usually, leading PMS providers help investors with buying and selling decisions and offer strategic advice that could help generate effective returns from their portfolio. 

Note that when an investor opts for a professional PMS provider, he/she is likely to benefit in several ways. For example, they achieve a customised portfolio mix as per their investment and liquidity requirements. Often portfolio management services offer add-on services like advice on REIT.

Besides that, PMS investors enjoy independent and transparent holdings that allow them to keep a tab on every change and momentum of their portfolio. Also, they are likely to receive superior and more satisfactory returns than most investment avenues, and enjoy complete transparency regarding the associated expense ratio.

Since a lot depends on the investor’s choice of portfolio management services provider, they should make it a point to analyse whether the portfolio managers will be able to deliver on the investor’s goals or not. Investors can connect with the best in portfolio management service business through the KredX portal and simplify the tedious process in a few steps. We serve as a digital marketplace for digital gold, PMS, and bonds.