Portfolio Management Services (PMS) are investment products offered by financial institutions and investment firms in which a professional portfolio manager manages an investor’s customized investment portfolio. The portfolio manager collaborates with the investor to develop a customized investment portfolio that meets their unique financial objectives, investment objectives, and risk profile.
Investors should consider their investment goals, risk tolerance, and financial situation before investing in PMSs.
When is PMS included in a portfolio?
When an investor has a larger portfolio and needs a more personalized investment approach than what is typically available through mutual funds or other investment products, portfolio management services (PMS) may be included in the portfolio.
Suitability
Investors can benefit from professional investment management and active portfolio monitoring through PMS, which can help them optimize their returns and manage investment risks. It may be appropriate for those seeking greater control over their investment portfolio.
Overall, PMS can be a good investment for high-net-worth individuals, institutional investors, and those who need a tailored investment strategy.
Caution
Some of the risks of investing in PMS include:
Market risk: PMS investments are subject to market risk, which means that the portfolio’s value can fall due to changes in market conditions such as economic downturns, geopolitical events, or interest rate fluctuations.
Manager risk: The performance of a PMS investment is highly dependent on the portfolio manager’s expertise and investment decisions. The portfolio’s returns may suffer if the manager does not perform well or makes poor investment decisions.
Concentration risk: PMS investments may be concentrated in a few stocks or sectors, increasing the risk of loss if those stocks or sectors underperform.
Liquidity risk: PMS investments can be illiquid, which means they may be difficult to sell quickly, especially during times of market stress or downturn.
Operational risk: There is always the possibility of operational errors or fraudulent practices by the portfolio management firm, which could result in investor losses.
