This guide explores the different types of Portfolio Management Services, their unique characteristics and helps you determine the best PMS provider for your investment journey.
What is Portfolio Management Services (PMS)?
Portfolio Management Services (PMS) is a professionally managed investment service designed specifically to discerning investors. Unlike mutual funds, PMS provides direct ownership of securities and customised investment strategies tailored to your individual financial goals, risk appetite and market outlook.
Broadly, there are three types of PMS services:
- Discretionary PMS
- Non-Discretionary PMS
- Advisory PMS
Let’s explore each type in detail.
1. Discretionary PMS
In Discretionary PMS, the professional portfolio manager has complete control over investment decisions. The investor delegates full responsibility for buying and selling securities based on market research, the investor’s risk profile and financial goals.
Who Should Opt for Discretionary PMS?
- Investors seeking a fully hands-off, professionally managed portfolio.
- HNIs and UHNIs aiming for long-term wealth creation without frequent personal intervention.
- Investors who prefer swift, expert decision-making to capitalise quickly on market opportunities.
Pros:
- Expert professional management with minimal investor involvement.
- Strategies based on deep market analysis and comprehensive research.
- Ideal for investors targeting sustainable, long-term alpha returns.
Cons:
- Investors have less control over individual investment choices.
- Performance relies entirely on the portfolio manager’s expertise.
2. Non-Discretionary PMS
In Non-Discretionary PMS, the portfolio manager provides investment strategies and expert recommendations, but the final investment decision rests entirely with the investor. Execution occurs only after investor approval.
Who Should Opt for Non-Discretionary PMS?
- Investors who prefer active participation in investment decisions while leveraging professional insights.
- HNIs and UHNIs with significant market knowledge who prefer advisory guidance along with personal decision-making power.
- Those looking for a balanced approach between professional analysis and personal investment philosophy.
Pros:
- Investor maintains control over final investment decisions.
- Access to professional market research, analysis and insights.
- Flexibility to align investment strategies closely with personal objectives.
Cons:
- Requires investors’ time commitment and solid market expertise.
- Potential delays in decision-making may lead to missed market opportunities.
3. Advisory PMS
Advisory PMS provides purely advisory services. The portfolio manager offers customised, research-backed investment recommendations, but all execution responsibilities lie solely with the investor.
Who Should Opt for Advisory PMS?
- Highly experienced investors preferring complete autonomy over investment execution but requiring expert input.
- HNIs and UHNIs who already have an in-house financial team but seek specialised recommendations for strategic investment decisions.
- Investors seeking a cost-effective portfolio management solution without sacrificing decision-making authority.
Pros:
- Complete autonomy over the investment execution process.
- Access to expert, research-based customised recommendations.
- Lower management fees compared to Discretionary or Non-Discretionary PMS.
Cons:
- Investors bear complete responsibility for execution, requiring time and considerable expertise.
- Not ideal for investors seeking a hands-off investment approach.
How to Choose the Best PMS for Your Investment Goals?
Selecting the best Portfolio Management Service provider depends on several crucial factors:
1. Investment Knowledge & Experience
- Beginners or passive investors might prefer Discretionary PMS for professional management.
- Experienced investors often choose Non-Discretionary or Advisory PMS to retain more control.
2. Risk Appetite & Financial Goals
- For long-term, hands-off wealth creation, choose Discretionary PMS.
- If balancing risk management and control is a priority, Non-Discretionary PMS is suitable.
- For active decision-makers who are risk-conscious, Advisory PMS is best.
3. Time Commitment
- Busy professionals and business owners with limited time often prefer Discretionary PMS.
- Investors enjoying personal research and direct involvement should consider Non-Discretionary or Advisory PMS.
4. Trust in Fund Manager vs. Personal Control
- Trust professional fund managers completely? Choose Discretionary PMS.
- Prefer hands-on investment management? Non-Discretionary or Advisory PMS will suit you better.
Final Thoughts: Finding the Right PMS Provider
Selecting the ideal type of Portfolio Management Services is vital for aligning investment strategies with your personal goals, investment philosophy and lifestyle. At 9Point Capital, we offer digital asset Portfolio Management Services designed explicitly for HNIs and UHNIs investors. Our offerings include secure, transparent and tax-efficient solutions with global access and alpha-driven strategies that optimise your portfolio performance.
Ready to choose the best PMS for your financial goals?
