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With the investing environment created around, everyone wants to invest in options like equities, bonds, mutual funds, ETFs, and more. But not all have a detailed understanding of the market. Precisely, they lack insights into how different market forces impact yields. At this point, where a person is limited to knowledge, portfolio managers come to the rescue.
With their portfolio management service, they can guide you on how to groom your portfolio and also strategize the yields with a practical investment approach. These managers ensure that the portfolio does not get extreme exposure to the market, the risk associated with it, and a lot more.
Throughout this blog, we will understand the meaning of portfolio management, the types of PMS services available, objectives, benefits, how it works, and much more.
According to the portfolio management definition, it is a professional service offered by individuals (or portfolio managers) who manage clients' investments and provide a strategy to grow them. These professionals work on behalf of the client to align their investment goals with the portfolio.
With their expertise and professionalism, portfolio managers try to create an investment basket that includes a variety of investments, such as equity, bonds, options, mutual funds, ETFs (exchange-traded funds), and more. They also allocate assets according to your risk appetite and investment profile to further elevate the portfolio.
Portfolio management refers to the strategic selection, allocation, and oversight of assets within the portfolio. Likewise, when the market turns volatile, fund managers adjust the portfolio while balancing the ongoing risk.
Think of it as a nutritionist who tries to give you a customized diet as per your body's requirements. The same applies to your investments as well. And that's what portfolio management means!
However, the process of portfolio management is not just managing the investments but a lot more. It includes:
Before taking portfolio management services, it is better to understand the objectives as to why one should be enrolling for them. Some of the common reasons are as follows;
If you plan to take PMS services, you and your portfolio are eligible for certain benefits. It includes:
Precisely, you should consider portfolio management if;
The basic difference between portfolio management and financial planning is planning and execution. Financial planning involves devising an investment strategy based on your risk tolerance level, income, and ability to invest. However, portfolio management involves actually managing those investments and making adjustments when required.
Other distinct features are discussed below:
Parameter |
Portfolio Management |
Financial Planning |
|---|---|---|
| Meaning | Managing the investments | Devising a plan that manages your financial life |
| Purpose | Focused on optimizing the yields and balancing the risk | Covers savings, budgeting, retirement planning, estate planning, and more |
| Who provides it? | Portfolio manager or PMS company | Certified financial planner (CFP) or advisory firm |
| Ideal for? | HNIs, UHNIs, or someone who lacks knowledge in investments | Anyone with income and financial goals |
Portfolio management isn't just about picking the right stocks. It's about building a strategic and well-balanced investment plan that reflects your financial goals, risk appetite, and time horizon. Whether done personally or through professional services, effective PMS helps you stay disciplined, diversified, and aligned with your long-term financial vision. So, whether you are HNI, UHNI, or someone with no knowledge about market volatility or investments, PMS can be your go-to person.
The role of a portfolio manager is to:
The minimum amount required to avail portfolio management services is ₹50 lakhs. Thus, it makes a suitable option for high-net-worth individuals.
Some common factors worth consideration for portfolio managers are risk (investment-related), market volatility, and the client's understanding of the market.
