PMS

Portfolio Management Services (PMS) is a professional wealth management product offered by SEBI-registered portfolio managers. Unlike mutual funds where money is pooled, PMS accounts are individually managed — you hold securities directly in your own demat account, giving you full transparency and ownership of individual stocks.

The minimum investment threshold for PMS in India is INR 50 lakh, as mandated by SEBI. This high entry barrier makes it a product for High Net Worth Individuals (HNIs). PMS managers charge a combination of management fees (typically 1-2.5% per annum) and performance fees (often 10-20% of profits above a hurdle rate, subject to a high-water mark).

There are three types of PMS: discretionary (the manager makes all decisions), non-discretionary (the manager advises but the client approves each trade), and advisory (the manager only provides recommendations). Discretionary PMS is the most common in India, with firms like Marcellus, Alchemy, ASK Investment, and Motilal Oswal being prominent providers.

SEBI regulations require PMS providers to register under the SEBI (Portfolio Managers) Regulations, 2020. They must disclose performance track records (audited), investment strategies, fee structures, and risk factors. Unlike mutual funds, PMS returns are not standardised — each client's portfolio may differ based on entry timing and specific allocations.

Tax treatment of PMS differs from mutual funds. Since you hold individual securities, each buy and sell generates a separate capital gains event. STCG at 20% applies to equity holdings sold within 12 months, while LTCG above INR 1.25 lakh is taxed at 12.5%. This can create a more complex tax filing compared to mutual fund redemptions.