InvestorQ : What exactly is a PMS and what role does it play?
Arti Chavan made post

What exactly is a PMS and what role does it play?

Aditi Sharma answered.
3 years ago

A portfolio management service (PMS) is a value added service that is offered by quite a few brokers, advisors and professional portfolio managers in India. A PMS needs to be registered with the Securities & Exchange Board of India (SEBI) and only after securing their PMS license can they start offering this service to clients. This kind of regulation ensures that the interests of the clients are protected as they can rest assured in the knowledge that SEBI is overseeing the activities of the PMS.

There are two basic things you need to know about a PMS. Firstly, a PMS collects money from investors and invests in the market. It is principally like a mutual fund but addresses the specific needs of High Net Worth investors rather than small retail investors. Secondly, a PMS is not allowed to assure returns under SEBI regulations. When you participate in a PMS, you run all the normal market risks in any equity product.