Portfolio Management Service

Portfolio Management Service Latest News

Recently, the Securities and Exchange Board of India (SEBI) has proposed a sweeping review of the SEBI (Portfolio Managers) Regulations, 2020, seeking to modernise the framework governing portfolio management services (PMS).

About Portfolio Management Service

• It is registered under the SEBI (Portfolio Managers) Regulations, 2020.
• It is a professional investment service where a qualified fund manager takes charge of the equity, debt and other securities portfolio of a customer — who is a high net-worth individual.
• Who can offer: Only corporate entities, companies or LLPs with SEBI registration can legally offer these services in India.
• SEBI mandates that no PMS provider can accept less than Rs 50 lakh per client.

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Types of Portfolio Management Service

• Discretionary PMS: In this type of PMS services, the portfolio manager has complete autonomy to make investment decisions on behalf of the investor.
• Non-Discretionary PMS: In non-discretionary PMS, the portfolio manager provides recommendations, but the final decision to buy or sell rests with the investors themselves.
• Advisory PMS: In Advisory PMS, the portfolio manager offers investment advice, and the investor executes transactions independently.

Key Regulations of Portfolio Management Service

• Registration: All PMS providers must register with SEBI.
• Minimum Investment Requirement: SEBI mandates a ₹50 lakhs minimum investment, targeting high net worth investors capable of managing associated risks.
• Disclosure Obligations: PMS providers must regularly update investors with performance reports, fees, and risk disclosures.
• Custodian Engagement: An independent custodian is required to hold investor assets to eliminate conflicts of interest
• Compliance Monitoring: Each PMS provider is required to appoint a compliance officer to ensure adherence to SEBI regulations

Source: IE