InvestorQ : What are the charges involved in PMS(Portfolio Management Service)?
Ayushi Kampani made post

What are the charges involved in PMS(Portfolio Management Service)?

krithika Saxena answered.
3 years ago
When an investor avails PMS a separate bank account, D-mat account, and trading account are separately opened in his name and all investments are made in his name only. Accordingly, any income or dividend arriving on your investment is credited to the same bank account and shares will be held in the D-mat account only. When you opt for a PMS, you need to sign an agreement, which specifies all the details of services to be provided along with strategies and models of the portfolio to be followed by the portfolio manager. When you sign it, you give a power of attorney for operating your trading and bank account to the portfolio manager.

PMS has a high cost of maintenance as compared to any other investment option. It involves the following charges:
  1. Entry Load: When you avail PMS you have to fee an entry fee, generally termed as entry load or set up cost. It varies according to the service provider. However, it generally ranges between 1-3% of your initial investment and gets deducted automatically from the said investment.
  2. Management charges: PMS is managed by professionals and hence they need to be paid for their services. These charges range between 1-3% and vary according to the service provider.
  3. Profit-sharing fees: If PMS has a profit-sharing agreement with the client, then these charges are paid based on the agreement. Some service providers charge this on the basis of the hurdle rate.
Since all the transactions are done in the name of the investor, other charges are also levied such as:
  • D-mat account opening charges
  • Audit charges
  • Custodian Fees
  • Transaction Brokerage
However, the fees of the service providers are negotiable, so you can exploit it as much as you can.