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Art & Science of PMS



The art and science of following markets successfully require formal education, years of experience, deep understanding of fundamental and technical analysis tools, up-to date market intelligence and more.


Role of a PMS provider

  • Understanding investor needs and suitably making asset allocations.

  • Defining investment rules.

  • Transacting trades with stock broker and maintaining DP account, books of account, bank account on behalf of the customer.

  • Reporting to investor on periodic basis on performance of his or her portfolio.

  • Complying with all statutory laws including audit on behalf of the investor


Steps in creating a portfolio

  • Asset allocation Process.

  •  Fixing Investment rules within every asset category.

  • Defining universe of stocks which qualify for investments.

  • Ranking of universe in terms of potential for growth.

  • Buying & selling activities based on fundamental and technical analysis, news, estimated trends and so on.

  • Continually review asset allocation, universe, ranking based on market and business dynamics.


Portfolio Modeling by a PMS Manager

Assessing client’s risk appetite, return expectations and liquidity requirements. Starts with…

The portfolio manager will probe and understand more about you and assess your investment objectives based on many parameters like

  • Demographic profile – Your PMS Manager will consider your age & qualification, your health aspects, risks of carrying hereditary diseases, your investments in insurance policies for self and dependents, details of members’ dependant on you and associated capital expenditure on their weddings or education.

  • Existing debts [if any] - Your average monthly commitments & tenure left for extinguishing of your debts.

  • Existing work details – Your nature of work / business against competition; and if the income sufficient to meet routine life style commitments?

  • Detailed understanding of existing business -   Understanding your business in terms of fluctuations in revenues, levels of competition,   scope for growth, estimated capex requirement for next 2 to 3 years and likelihood / quantum of savings to be generated.

  • Existing Investment details - Your existing investments in debts, equities, FD, bullion, annual insurance commitments.  Your existing real estate assets  like residence, office, rental yielding properties, others


Based on your assessment, your portfolio manager in consultation with you will recommend / advice on following aspects:

  • What should be the size of your Portfolio account? Plus, planned additional add-on investments quarter on quarter.

  •  What type of Portfolio account should you open?  PMS is broadly offered as discretionary and non-discretionary.  In discretionary module, the investment decisions are solely taken by portfolio manager while in non-discretionary module, the recommendations are made by Portfolio Manager but the final decision rests with the clientele.

  • Where to allocate your investments? Debt & money market, Equity & equity related others. Various risk parameters which needs to be addressed are

    •  Industry risks – Competition, cyclical & regulatory

    •  Performance risks – Sales growth, profit growth, RONW, OPM

    •  Management risks – Transparency, holding, promoter pledging

    •  Leverage risks -  Debt – Equity, Interest coverage

    •  Valuations – PE multiple, beta, past consistency in performances

  • How to decide allocations within equity instruments? Your decisions will be based on following preferences.

    • Market capitalization – Low, Medium & High

    •  Risk aspects – Low, Medium, High

    •  Exposure limits – Entity, Industry, Business house

  • Your PMS Manager will define allocations on basis of your risk appetite. Investment decisions require deep understanding of market sentiments, acumen to read balance sheets and financial statements, vast knowledge of economy and industry, access to current information for estimating future performances, etc. 


Based on all aspects mentioned above, your PMS Manager will create a customized universe of stocks and debt instruments for you. Investments would never be done outside your universe and the quantum of investments would remain within maximum or minimum parameters laid for specific entity, sector or business house.


On a continuous basis your manager will Monitor market and stocks within universe and accordingly take decisions to buy, hold or sell.

You will receive a quarterly report from your manager about performance of your account.


A scientific model and a set of parameters are set for every PMS account and the same is reviewed quarterly. All investment decisions are made within the parameters to ensure that no baseless or undisciplined investment decision is ever taken.  A record is maintained justifying investment rationale for every investment transaction. 

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