What is the SEBI minimum investment for PMS?
SEBI mandates a minimum investment of ₹50 lakh per investor for Portfolio Management Services in India. This threshold was revised from ₹25 lakh to ₹50 lakh in January 2020 to ensure PMS is suitable only for sophisticated investors.
Can NRIs invest in PMS in India?
Yes, NRIs can invest in PMS in India subject to FEMA regulations. NRI investors must provide an NRE or NRO account, PAN, and complete KYC. Some PMS providers may have additional requirements for NRI clients. Finvastra helps navigate the NRI PMS process.
What is the difference between discretionary and non-discretionary PMS?
In discretionary PMS, the fund manager makes all investment decisions on your behalf within the agreed strategy. In non-discretionary PMS, every trade requires your explicit approval. Discretionary PMS is more common and allows faster, more effective execution.
How are PMS profits taxed?
Since PMS holds stocks directly in your demat account, capital gains are taxed directly in your hands. Equity LTCG (held 12+ months) is taxed at 12.5% above ₹1.25L per year. Equity STCG (held under 12 months) is taxed at 20%. No fund-level tax as with debt mutual funds.
What is a PMS performance fee structure?
PMS fees typically have two components: a fixed management fee (1–2.5% per annum on AUM) and a performance fee (10–20% profit sharing on gains above a hurdle rate of typically 10–12%). Some PMS providers offer a pure performance-based model with no fixed fee.
How do I evaluate a PMS manager?
Key metrics: 3 and 5-year CAGR vs benchmark (Nifty 50 / Nifty 500), Sharpe ratio, maximum drawdown, portfolio concentration (number of stocks), fund manager tenure, AUM size, and fee reasonableness. Finvastra provides a structured evaluation framework for PMS selection.
What are typical PMS exit terms?
Most PMS providers allow exit without a mandatory lock-in. However, some have a minimum holding period of 6–12 months or exit fees within the first year. Specific terms are defined in the Investment Management Agreement — review carefully before investing.
Is there a lock-in period for PMS?
Unlike AIF, most PMS strategies do not have a mandatory lock-in period. However, frequent or early exits may attract exit fees and sub-optimal capital gains treatment. A 3–5 year commitment is recommended for optimal results from equity PMS strategies.
What is the difference between PMS and AIF?
PMS (minimum ₹50L) gives direct stock ownership in your demat account and typically invests in listed equities. AIF (minimum ₹1Cr) is a pooled vehicle that can invest in unlisted securities, private equity, real estate, and hedge strategies with typically longer lock-ins of 3–7 years.
How does Finvastra select PMS managers?
Finvastra evaluates PMS managers on long-term track record (5+ years), risk-adjusted returns, strategy clarity, portfolio concentration, fee reasonableness, fund manager stability, and operational transparency. We short-list 3–5 managers across growth, value, and multi-cap strategies and match them to client objectives and risk profiles.