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Alternatives for larger portfolios

Portfolio Management Services (PMS)

A professional manages a portfolio held in your own name, for investors with larger amounts.

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Regulator
SEBI (Portfolio Managers Regulations, 2020)
Minimum
₹50 lakh in cash or securities
Ownership
Securities held in your own demat account
Fees
Fixed, performance-linked or a mix
Risk level: High

Most PMS portfolios are concentrated in fewer stocks than a mutual fund, so results can differ sharply from the market.

What is it?

In Portfolio Management Services, a SEBI-registered portfolio manager builds and manages a portfolio of stocks, bonds or other securities for you. Unlike a mutual fund, you own the securities directly in a demat account in your name, and the portfolio can be tailored more closely.

SEBI sets a minimum investment of ₹50 lakh, reflecting the higher risk of concentrated portfolios.

How it works

  1. You sign an agreement and transfer cash or existing securities.
  2. The manager buys and sells within the agreed strategy and reports to you regularly.
  3. Every transaction happens in your account, so you see each holding and trade.
  4. Fees are charged as agreed; performance fees usually apply only above a high-water mark.

Types

Discretionary PMSThe manager decides what to buy and sell. This is the most common type.
Non-discretionary PMSThe manager suggests trades and acts only with your approval.
Advisory PMSThe manager only advises; you place the trades.

Benefits and risks

Benefits

  • Professional, concentrated strategies that can differ from the index.
  • Direct ownership and full transparency of holdings.
  • Can be customised, for example to exclude certain stocks.

Risks and drawbacks

  • High minimum investment.
  • Fees can be higher than mutual funds, especially with performance fees.
  • Every trade is taxed in your hands, which can raise your tax bill.
  • Concentration can lead to long periods of underperformance.

How it is taxed

  • Each buy and sell is treated as your own transaction: equity gains are taxed at 12.5% over 12 months (above ₹1.25 lakh a year) or 20% within 12 months, and dividends at your slab rate.
  • Frequent trading can create short-term gains each year, unlike a mutual fund where tax arises only when you redeem.
Rules for FY 2026-27, reviewed November 2026. Surcharge and cess apply on top. Tax rules change, so confirm before you file. Our tax team can help with your return.

Who it may suit

Investors with large portfolios who want a professionally run, concentrated strategy in their own name and are comfortable with higher fees and volatility.

Getting started

  1. Compare managers' returns over several years, as reported against standard benchmarks.
  2. Read the disclosure document for fees, exit load and strategy.
  3. Confirm the manager's SEBI registration.
  4. Check how often you will receive reports and how to raise complaints.

Common questions

How is PMS different from a mutual fund?

A mutual fund pools money and you own units. In PMS you own the actual securities in your own account, with a higher minimum and usually higher fees.

Can I see PMS performance before investing?

Yes. Portfolio managers must report performance in a standard way, and industry data comparing PMS strategies against benchmarks is published regularly.

This guide is general education, not investment, tax or legal advice, and does not recommend any product. Investments in securities markets are subject to market risks; read all related documents carefully before investing.