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How to Invest in SIP A Beginner's Guide
In summary
Portfolio Management Services (PMS) provide professional management of an investor's portfolio based on their objectives, risk profile, and investment strategy.
- PMS is regulated by SEBI.
- The minimum PMS investment is Rs. 50 lakh.
- PMS can be discretionary or non-discretionary.
- Portfolio managers can manage securities based on an agreed mandate.
- PMS portfolios are held for individual investors.
- Fees may include management and performance-linked charges.
- Market and concentration risks can affect returns.
- PMS differs from mutual funds and investment advice.
PMS can provide greater customisation, but the higher entry requirement, costs, portfolio risks, and investment horizon should be considered before investing.
What are Portfolio Management Services?
Portfolio Management Services are professional investment management services offered by SEBI-registered portfolio managers. A portfolio manager manages investments according to the investor's financial objectives, risk appetite, investment horizon, and agreed mandate.
Unlike mutual funds, where money from multiple investors is pooled into a scheme, PMS generally involves managing an individual investor's portfolio.
PMS may be relevant to investors who want a more customised approach and have sufficient investable capital to meet the applicable minimum investment requirement.
How do Portfolio Management Services work?
PMS generally begins with an assessment of your financial position, investment objectives, liquidity requirements, investment horizon, and risk appetite.
The portfolio manager then develops a suitable strategy and manages the portfolio according to the agreed mandate.
The process generally includes:
- Client profiling: Your objectives, risk capacity, liquidity needs, and investment preferences are assessed.
- Strategy formulation: The portfolio manager develops an investment approach based on your profile.
- Account setup: Required demat, trading, and bank accounts are arranged as applicable.
- Portfolio construction: Securities are selected according to the investment strategy.
- Ongoing management: The portfolio is monitored and adjusted when required.
- Reporting: You receive information about holdings, transactions, performance, and other applicable disclosures.
The exact process can differ between portfolio managers and strategies.
What are the types of PMS?
PMS can broadly be classified according to the level of control given to the portfolio manager and the investor.
Discretionary PMS
In discretionary PMS, the portfolio manager makes investment decisions on your behalf within the agreed investment mandate.
You do not generally need to approve every individual transaction. This can suit investors who prefer to delegate day-to-day investment decisions to a professional.
Non-discretionary PMS
In non-discretionary PMS, the portfolio manager provides investment recommendations, but the investor retains the authority to make the final investment decision.
This structure can suit investors who want professional research and recommendations while remaining involved in portfolio decisions.
What are the main objectives of portfolio management?
Portfolio management is not limited to selecting individual securities. It involves constructing and maintaining a portfolio around specific financial objectives.
Key objectives include:
- Asset allocation: Distributing investments across suitable asset classes.
- Diversification: Spreading exposure across securities, sectors, or other permitted investments.
- Risk management: Aligning portfolio risk with the investor's ability to tolerate losses.
- Liquidity management: Maintaining investments in line with expected cash requirements.
- Rebalancing: Adjusting allocations when they move materially away from the intended strategy.
These principles can also help you understand how different investment products approach portfolio construction.
What are the benefits of PMS?
PMS can provide a higher degree of portfolio customisation than many pooled investment products.
Personalised portfolio management
The portfolio can be structured around your financial objectives, risk tolerance, investment horizon, and preferences. This can be useful when a standard investment product does not sufficiently match your requirements.
Professional management
Portfolio managers and their research teams monitor securities, assess market developments, and implement the selected investment strategy.
Direct portfolio ownership
Investments are generally held in the investor's own account. This can provide visibility into individual securities, transactions, and portfolio composition.
Greater flexibility
Depending on the mandate, PMS can provide greater flexibility around security selection, portfolio construction, and investment strategy than a standard pooled product.
What are the risks and limitations of PMS?
PMS does not guarantee returns or protect your capital. The value of investments can decline because of market movements, company-specific developments, economic conditions, interest-rate changes, or other factors.
Important risks include:
- Market risk: Securities can lose value.
- Concentration risk: A portfolio with fewer holdings can be more affected by individual securities.
- Strategy risk: The selected strategy may underperform its benchmark.
- Liquidity risk: Some securities may not be easy to sell at the desired price.
- Manager risk: Investment outcomes depend partly on portfolio-management decisions.
- Cost risk: Fees and transaction costs can reduce net returns.
Investors should therefore assess PMS based on risk-adjusted outcomes rather than returns alone.
How much money is required for PMS?
The minimum investment threshold for PMS is Rs. 50 lakh, subject to applicable regulations.
This makes PMS different from products such as mutual funds, which generally have much lower entry requirements. Investors with less than Rs. 50 lakh may consider other professionally managed investment options based on their objectives.
The threshold alone should not determine whether PMS is suitable. You should also consider your emergency liquidity, other investments, financial commitments, and ability to tolerate portfolio losses.
What are the charges for PMS?
PMS charges vary according to the portfolio manager, strategy, and fee arrangement.
Possible costs include management fees, performance-linked fees, brokerage, custody charges, transaction expenses, and applicable taxes.
Some performance-linked arrangements use a hurdle rate, which is a predetermined level of performance that must be achieved before a performance-linked fee becomes payable.
Do not compare PMS options only on gross returns. Consider the returns after applicable costs.
PMS vs mutual funds: what is the difference?
PMS and mutual funds both provide professional investment management, but their structures are different.
| Feature | PMS | Mutual funds |
|---|---|---|
| Portfolio structure | Individual investor portfolio | Pooled investment scheme |
| Management | Portfolio manager | Fund manager |
| Customisation | Higher | Scheme-specific |
| Minimum investment | Rs. 50 lakh | Varies by scheme |
| Investor ownership | Direct securities held for investor | Mutual fund units |
| Investment approach | Mandate-specific | Scheme objective-specific |
Last updated: October 2026
If you prefer a pooled investment structure, you can explore mutual funds and compare schemes based on your investment objectives.
How should you evaluate a PMS?
Past returns alone do not provide enough information to evaluate a portfolio manager.
Examine the investment strategy
Understand whether the strategy focuses on growth, value, a particular sector, market capitalisation, or another investment approach. Check the expected holding period and portfolio construction process.
Compare performance with an appropriate benchmark
Review performance over multiple periods and compare it with the relevant benchmark. Consider both upside participation and downside performance.
Examine costs and portfolio turnover
Frequent buying and selling can increase transaction costs. Understanding the portfolio's turnover and associated expenses can help you assess whether the strategy is being implemented efficiently.
Review the portfolio manager
Check the portfolio manager's SEBI registration, experience, disclosures, investment philosophy, and approach to risk management. Do not rely solely on marketing claims or historical returns.
Can PMS suit your investment needs?
PMS may be considered if you have substantial investable capital, want a customised portfolio, have a suitable investment horizon, and can tolerate market fluctuations.
It may be less appropriate if you need frequent access to your money, cannot tolerate significant portfolio volatility, or prefer a simpler investment product with a lower entry requirement.
For investors considering mutual funds instead, the mutual fund calculator from Bajaj Finance can help illustrate potential investment outcomes using different assumptions.
Similarly, the lumpsum calculator can help estimate potential values for one-time mutual fund investments. Such calculators provide illustrations and do not guarantee actual returns.
Conclusion
Portfolio Management Services provide professional and customised investment management for investors who meet the applicable minimum investment requirement and can accept market-linked risks. Discretionary and non-discretionary PMS differ mainly in the degree of investment decision-making delegated to the portfolio manager.
Before choosing PMS, evaluate the strategy, portfolio construction, benchmark, costs, liquidity, risks, manager experience, and regulatory disclosures. The Rs. 50 lakh threshold should be viewed alongside your overall financial position rather than as a measure of suitability.
Last reviewed: October 2026
Mutual funds are subject to market risk. Please read the scheme-related documents carefully before investing.
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Frequently Asked Questions
Regulation and eligibility
Portfolio management decisions
Returns and suitability
Is PMS regulated by SEBI?
Yes. Portfolio managers in India must operate under the regulatory framework prescribed by SEBI. Investors should verify the portfolio manager's registration and review the relevant disclosures before investing. SEBI regulation establishes operating and disclosure requirements, but it does not guarantee returns, eliminate market risk, or protect an investor from losses arising from investment decisions.
Can anyone invest in PMS?
PMS is available to eligible individual and non-individual investors who meet the applicable minimum investment requirement and other onboarding conditions. The current minimum investment threshold is Rs. 50 lakh. Investors should also satisfy the portfolio manager's documentation and account-opening requirements and assess whether the strategy is appropriate for their financial objectives and risk capacity.
Can I choose individual stocks in a PMS portfolio?
The extent to which you can influence individual holdings depends on the PMS structure and agreed mandate. A discretionary portfolio manager generally makes investment decisions within the mandate, while a non-discretionary arrangement gives the investor greater control over whether recommended transactions are executed. The agreement should clearly state the applicable decision-making process.
Can I change my PMS manager?
You can generally terminate or change a PMS arrangement subject to the terms of your agreement and the applicable process. Changing managers may involve transferring or selling securities, which can create transaction costs and tax implications. Before making a change, review the exit provisions, portfolio liquidity, costs, and practical process with the relevant portfolio manager.
What is a good return from PMS?
There is no single return that can be considered good for every PMS strategy. Returns should be assessed against the appropriate benchmark and alongside the risk taken, investment period, drawdowns, fees, and market conditions. A strategy producing a high return with substantially higher risk may not be preferable to one delivering comparable returns with lower risk.
Is PMS suitable for short-term investing?
PMS is generally more relevant to investors who can tolerate market fluctuations and remain invested for an appropriate period. Short-term investing can expose the portfolio to greater volatility and may make it harder to assess the strategy's performance fairly. Your liquidity needs, investment horizon, risk capacity, and the specific PMS mandate should all be considered.
Disclaimer
Bajaj Finance Limited ("BFL") is registered with the Association of Mutual Funds in India ("AMFI") as a distributor of third party Mutual Funds (shortly referred as 'Mutual Funds) with ARN No. 90319
BFL does NOT:
(i) provide investment advisory services in any manner or form.
(ii) carry customized/personalized suitability assessment.
(iii) carry independent research or analysis, including on any Mutual Fund schemes or other investments; and provide any guarantee of return on investment.
In addition to displaying the Mutual fund products of Asset Management Companies, some general information is sourced from third parties, is also displayed on As-is basis, which should NOT be construed as any solicitation or attempt to effect transactions in securities or the rendering any investment advice. Mutual Funds are subject to market risks, including loss of principal amount and Investor should read all Scheme/Offer related documents carefully. The NAV of units issued under the Schemes of mutual funds can go up or down depending on the factors and forces affecting capital markets and may also be affected by changes in the general level of interest rates. The NAV of the units issued under the scheme may be affected, inter-alia by changes in the interest rates, trading volumes, settlement periods, transfer procedures and performance of individual securities forming part of the Mutual Fund. The NAV will inter-alia be exposed to Price/Interest Rate Risk and Credit Risk. Past performance of any scheme of the Mutual fund do not indicate the future performance of the Schemes of the Mutual Fund. BFL shall not be responsible or liable for any loss or shortfall incurred by the investors. There may be other/better alternatives to the investment avenues displayed by BFL. Hence, the final investment decision shall at all times exclusively remain with the investor alone and BFL shall not be liable or responsible for any consequences thereof.
Investment by a person residing outside the territorial jurisdiction of India is not acceptable nor permitted.
Disclaimer on Risk-O-Meter:
Investors are advised before investing to evaluate a scheme not only on the basis of the Product labeling (including the Riskometer) but also on other quantitative and qualitative factors such as performance, portfolio, fund managers, asset manager, etc, and shall also consult their Professional advisors, if they are unsure about the suitability of the scheme before investing.
Disclosure: Bajaj Finance Limited (BFL) is a distributor of Mutual Funds with ARN - 90319 and distributes mutual funds of Bajaj Finserv Asset Management Limited (BFSAMC). BFL receives commission towards distribution of mutual fund products. BFSAMC is a group company of BFL, carrying business on arm’s length basis without any conflict of interest and in accordance with the prevailing law / regulation.
Disclaimer
Bajaj Finance Limited ("BFL") is an NBFC offering loans, deposits and third-party wealth management products.
The information BFL contained in this article is for general informational purposes only and does not constitute any financial advice. The content herein has been prepared by BFL on the basis of publicly available information, internal sources and other third-party sources believed to be reliable. However, BFL cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed.
This information should not be relied upon as the sole basis for any investment decisions. Hence, User is advised to independently exercise diligence by verifying complete information, including by consulting independent financial experts, if any, and the investor shall be the sole owner of the decision taken, if any, about suitability of the same.
Disclaimer
Mutual Fund SIP calculator may provide potential investors an approximate estimate on the maturity amount of the monthly SIP, purely based on mathematical calculation of the projected annual return rate selected by investor. However, such calculation does not factor the actual performance by the Asset Management Company (AMC) and should not be treated as any advice or assurance about the actual return of investment. Mutual Funds do not have a fixed rate of return and it is not possible to predict the rate of return. Please note that the SIP calculator are for illustrations only and do not represent actual returns which may vary depending on various factors including but not limited to actual performance, expense ratio, taxation, exit load (if any), etc.