WHAT IS A PORTFOLIO MANAGEMENT SERVICE (PMS) OF MUTUAL FUND SCHEMES?
PMS is a professionally managed investment portfolio that invests primarily in mutual fund schemes, exchange-traded funds (ETFs) and Specialised Investment Funds (SIFs), instead of individual stocks. Unlike an equity PMS, where the portfolio consists of shares selected by the manager, a mutual fund PMS builds a portfolio using schemes from one or more asset management companies. The portfolio manager decides the allocation across different asset classes such as equity, debt, gold, silver and international funds, and continuously monitors and rebalances the portfolio based on market conditions, valuations and the investor’s objectives. For instance, a multi-asset PMS may invest in active equity funds, equity ETFs, debt funds or debt ETFs, gold and silver ETFs, REITs, InvITs and international funds.
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WHAT HAS SEBI PROPOSED FOR THIS SEGMENT?
Sebi has proposed a separate regulatory framework for mutual fund-only PMS providers in a consultation paper released last week. It has proposed reducing the minimum investment amount to Rs 25 lakh from the current Rs 50 lakh. The regulator has also proposed lowering the minimum net-worth requirement for portfolio managers to Rs 2 crore from Rs 5 crore, simplifying certification requirements, making dedicated dealing rooms optional and waiving exit loads while switching between mutual fund schemes within the PMS portfolio
HOW IS A PMS DIFFERENT FROM INVESTING IN MUTUAL FUNDS YOURSELF?
WHO SHOULD USE A MUTUAL FUND PMS?
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Subscribe to The Economic Times Prime and read the ET ePaper online.