Careers in PMS

This paper is about the world of portfolio management services (PMS) and an insight about how different PMS organizations operate in the market. This webinar has looked at the portfolio management landscape in India and the working of a portfolio manager.  

Prateek Agarwal has conducted this webinar to discuss about different concepts, different scenarios of a financial market and different aspects that a portfolio manager must be prepared for. He is an electronics engineer from NIT Rourkela, a PGDM from XIM Bhubaneswar and currently a part of ASK, which is a PMS house with AUM more than INR 27,000 cr.  

Evolution from stockbrokers to PMS

The webinar begins with a brief history about how the brokers used to be the only gateway to the market and small investors used to trust brokers with their money as there was little to none financial awareness before the establishment of NSE and digitization of broking. Unofficial market information called as ‘tips’ used to get published in booklets and were sold outside the BSE for the investors to read and catch up on the latest happenings of the market.

Due to digitization of broking services and after the establishment of NSE, many small and medium level brokers collapsed and their service started diminishing at a rapid speed. Only a few big brokers could handle this rapid wave of change, some of them are big names such as Motilal Oswal, Alchemy, Enam, etc. as they had their roots in the broking services space. They sustained the change as they had a large AUM compared to the smaller brokers and were able to continue their business without much difficulty.  

Agarwal mentions that the PMS industry is a very dynamic space as many different names get established and run out of business due to constant severe market movement. The small sized PMS houses do not sustain change as they do not have high AUM and have clients that aren’t HNIs or super HNIs like the big houses.

Types of PMS services

PMS houses conduct 3 types of portfolio management services –   

1. Discretionary PMS 

2. Non-Discretionary PMS 

3. Advisory PMS 

Discretionary PMS is the one that is being conducted by a majority of PMS organizations which allows the portfolio manager to conduct the investment activities on behalf of the investor. All decision can be made by them without any permission as they hold a power of attorney signed by the investor.

Non-Discretionary PMS allows the manager only to suggest investment ideas and not make the investment. After obtaining permission from the investor, the manager can proceed to make the investment and manage the portfolio. 

Advisory PMS is when a manager can only advise about the portfolio. The execution of a trade solely lies in the hands of the investor.  

Benefits of PMS

Agarwal mentions that PMS have qualified and experienced portfolio managers backed by strong research team that can manage portfolios on behalf of the clients managing it themselves. Their biggest competition to business are individual investors who are capable of handling their own money; who are larger in size in India than PMS clients.

He also suggested during the webinar that investors should start opting for PMS as they focus on returns in an effective and efficient manner as they try to have a good risk to rewards ratio. They usually try to increase their rewards in terms of risk taken in order to grow a PMS organization’s AUM, which could lead to growth of the client. As per Mr. Agarwal, the usual goal of a PMS house’s AUM should be more than INR 1000 cr.  

The large investors like HNIs, super HNIs and sovereign individuals have the luxury of having customized services in order to suit their investment needs. Agarwal gave an example to help understanding this. For example, a CEO of a cement manufacturing company has approached a PMS organization to grow his money. A portfolio manager will assess his capital, and can invest 5% of his capital in cement industry for industry’s growth and the remaining 95% in other industries for his capital appreciation and for growth of AUM of the PMS house.  

Agarwal mentions transparency is one of the key principles of a PMS house as the investor is always aware about the different trades that are executed by a portfolio manager. CDSL and NSDL send a message to the investor as the investor’s demat account has been used.

“PMS can give better returns in comparison to a mutual fund” said Agarwal as he mentioned how PMS are client focused and aggressive in nature for returns. He talks about his clientele being in the range of 50-60 years of age and having the focus of capital appreciation and capital preservation at the same time.  

He concludes by saying that having a career in portfolio management means to the best at few skill and to do them diligently and excel at those. Being good at all skills will not lead you to specialization. Winning a client’s trust and working under the pressure of financial markets will be difficult as well as rewarding due to the constant growth in this sector.  


Source: SEBI 

This summary was prepared by Taniya Sonalkar based on the webinar by Prateek Agarwal at the CFA Institute.  

Career Insights: Portfolio Management ( 



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