PMS Disclosures
Portfolio Management Services (PMS) Disclosures
Portfolio Management Services (PMS) are sophisticated, high-risk equity products suitable ONLY for High Net Worth Individuals (HNIs) who have a minimum investable surplus of ₹50 Lakhs (Rupees Fifty Lakhs) in this asset class and a high/aggressive risk tolerance. PMS is NOT a mutual fund and involves direct ownership of concentrated stock portfolios. Past performance does not guarantee future returns. Always read the complete PMS Disclosure Document before investing.
1. What is Portfolio Management Services (PMS)?
Portfolio Management Services (PMS) is a professional, customized investment service offered by SEBI-registered Portfolio Managers to high-net-worth individuals and corporate institutions. Unlike Mutual Funds where all investors hold units in a common collective pool, PMS establishes an independent, segregated Demat account for each investor with direct ownership of underlying listed securities.
Direct Demat Ownership
Securities are held directly in your individual Demat account under your name, providing direct corporate benefit pass-through.
₹50 Lakhs Minimum
SEBI strictly mandates a minimum investment ticket size of ₹50 Lakhs per investor per portfolio manager.
Concentrated Alpha
Focused high-conviction portfolios holding 15 to 30 stocks, targeting active benchmark outperformance.
Professional Management
Managed by seasoned fund managers with rigorous quantitative and fundamental research models.
Direct Fee Deduction
Management and performance fees are debited separately from your account rather than deducted within NAV.
APMI & SEBI Regulated
Governed by SEBI (Portfolio Managers) Regulations, 2020 and industry standards set by APMI India.
2. Four Primary Types of PMS Frameworks
Discretionary PMS
The Portfolio Manager independently manages the funds and executes all buy/sell transactions on your behalf per the pre-agreed strategy mandate. Most popular form in India.
Non-Discretionary PMS
The Portfolio Manager provides research recommendations and strategy execution, but each trade requires prior approval from the investor.
Advisory PMS
The Portfolio Manager provides strategic asset allocation and stock guidance, while order placement and execution is handled directly by the client.
3. Investor Eligibility & Suitability Framework
- High Net Worth Individuals (HNIs) & Ultra-HNIs
- Resident Indians, NRIs (via PIS/NRE accounts), HUFs & Family Offices
- Minimum ₹50 Lakhs investable surplus in equity asset class
- Documented 'Aggressive' or 'High Risk' investor risk profile
- Investment time horizon of 3 to 5+ years
- Ability to absorb short-term drawdowns in concentrated stocks
- Retail investors or portfolios under ₹50 Lakhs surplus
- Conservative or Moderate risk profile investors
- First-time equity investors seeking guaranteed returns
- Capital needed for short-term liquidity within 3 years
- Investors uncomfortable with single-stock volatility
4. Key Risk Disclosures — Per SEBI (PMS) Regulations
Concentration Risk
PMS holds 15–30 stocks. Negative news or poor earnings in 2–3 holdings will impact the overall portfolio much more heavily than a 60-stock MF.
Mid/Small-Cap Liquidity
Strategies targeting small and mid-cap companies may face liquidity constraints during sharp market downturns.
Fund Manager Dependency
Performance relies heavily on the individual style and market timing of the designated portfolio manager.
Cost Drag & Separate Fees
Fixed management fees, performance hurdles, and transaction brokerages are debited directly, impacting net CAGR.
Tracking Variance
Concentrated active bets can cause substantial divergence and underperformance relative to Nifty 50 or BSE 500 benchmarks.
Tax Event on Rebalancing
Every buy/sell within your Demat account triggers capital gains tax events in that financial year.
5. PMS Fee Structure & Cost Breakdown
| Fee Component | Standard Industry Range | Operational Description |
|---|---|---|
| Management Fee (Fixed) | 1.00% – 2.50% p.a. | Annual asset management fee charged quarterly/monthly on daily average portfolio AUM. |
| Performance Fee (Profit Share) | 10% – 20% above Hurdle | Profit share charged on gains above an agreed hurdle rate (typically 8%–10% p.a.) using high-water mark principle. |
| Exit Load | 1% – 3% (Early Exit) | Applicable if redemptions occur within year 1, 2, or 3. Zero exit load in many long-term strategies. |
| Custodian & Demat Fees | ₹1,000 – ₹5,000 p.a. | Annual custody, Demat account maintenance (AMC), and fund accounting charges. |
| Brokerage & Statutory STT | 0.05% – 0.20% per trade | Standard institutional brokerage, STT, exchange turnover fees, and stamp duty on portfolio churn. |
| Applicable GST | 18% GST | Levied on fixed management and performance fees as per Government of India regulations. |
6. FINWISDOM's Role as PMS Distributor
- Distribution Intermediary: FINWISDOM acts strictly as an APMI-registered distributor and does not execute investment decisions or manage portfolio assets.
- Manager Fiduciary: All stock selection and trading decisions rest entirely with the respective SEBI-registered Portfolio Manager.
- Fee Disclosure: FINWISDOM receives distributor placement/trail remuneration from the PMS manager as disclosed in the agreement.
- Risk-Suitability Gate: We recommend PMS strategies solely to clients with documented 'Aggressive' risk appetite and ₹50L+ capacity.
- Portfolio Diversification: We advocate that PMS should constitute a tactical allocation alongside core mutual fund portfolios.
7. Empanelled PMS Partners (5 Managers)
| # | PMS Provider / Manager | Strategy Focus | Minimum Investment | Status |
|---|---|---|---|---|
| 1 | Motilal Oswal PMS | QGLP Equity Strategies | ₹50 Lakhs | Empanelled |
| 2 | Bugle Rock PMS | Multi-Cap Growth | ₹50 Lakhs | Empanelled |
| 3 | Buoyant PMS | Opportunities / High Alpha | ₹50 Lakhs | Empanelled |
| 4 | Alchemy PMS | High Growth Equity | ₹50 Lakhs | Empanelled |
| 5 | Renaissance PMS | Value & Mid-Cap Focus | ₹50 Lakhs | Empanelled |
8. Pre-Investment PMS Checklist for Investors
- Read the complete PMS Disclosure Document — mandatory per SEBI regulations
- Verify SEBI registration and APMI APRN status of the Portfolio Manager at sebi.gov.in
- Understand the fee structure completely — fixed management fee, carry percentage, hurdle rate, and GST
- Review the PMS strategy's 3-year and 5-year track record against appropriate benchmark indices
- Understand the investment mandate — sector limits, market cap focus, and portfolio concentration
- Confirm the fund manager's pedigree, investment philosophy, and strategy continuity
- Ensure the ₹50 Lakhs minimum is drawn from long-term investable surplus — not emergency reserves
- Review and execute the PMS Agreement and Power of Attorney (POA) with full comprehension
Official Portals & Verification Resources
SEBI Registered PMS
Verify SEBI registration status, registered address, and compliance records of Portfolio Managers.
sebi.gov.in → Portfolio Managers ↗APMI India Portal
Industry association of Portfolio Managers in India. Verify distributor APRN registrations and industry guidelines.
apmiindia.org ↗SEBI SCORES Portal
Lodge and track investor grievances against SEBI-registered PMS managers and distributors.
scores.sebi.gov.in ↗SMART ODR Platform
Online dispute resolution mechanism for conciliation and arbitration in the Indian securities market.
smartodr.in ↗Devansh S Mehta | Director & GRO
FINWISDOM FINANCIAL SERVICES PVT LTD (ARN-367223)
Email: devansh@finwisdom.co.in | Phone: 9920217997 | Grievance Portal ↗