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Get the right portfolio service for your needs

The requirement of keeping the assets separate will increase the cost of those operators who do not follow the procedure currently and this might lead to an adjustment of cost, writes Arnav Pandya.

india Updated: May 19, 2008 21:05 IST
Arnav Pandya

Portfolio Management Services (PMS) has been booming in recent times with a lot of players offering the service. This service has also come under the scanner of the market regulator who has prescribed several conditions to run such schemes in the country. Investors would do well to take a look at some of the essential features so that they get the best services.

No pooling of assets

The method of managing the money in a portfolio management scheme is important. In several cases the PMS player pools together the money of various investors and then buys certain scrips for them. This gets reflected in the holdings of the investor. A new condition prescribes that the assets of each of the clients will have to be kept separately and then shares bought in each of the client’s name. This is to ensure that there is a proper management of the money that has been given by the investors and to distinguish it from a mutual fund scheme.

Check for costs

Several costs are present in a PMS scheme and these are clearly stated in the offering produced before the investors. The requirement of keeping the assets separate will increase the cost of those operators who do not follow the procedure currently and this might lead to an adjustment of cost. The investor should keep an eye out for various costs that are present and if they change in the future then they need to evaluate the same. This is essential to ensure that the costs do not jump too high for the investor.

Execution details

Every investor who has a holding in the PMS would like to ensure that their portfolio is maintained properly and that there is effective investment of the available funds. The execution of the various transactions has to be done properly so that there is no confusion in reconciling the various details that are present in the account. This will also ensure that there is adequate record keeping and that the details are available so the investor can check for performance and make their own judgment.

Official player

Entities and people who run the PMS schemes now need a higher net worth figure of Rs 2 crore. This along with the existence of various systems is required so it is the duty of the investor to check that all the details are present and available and that they are getting the services of players that are officially able to run the schemes. This will ensure compliance with the various regulatory aspects of their schemes.

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