What is a PMS?
A Portfolio Management Service is a professionally run equity portfolio held in your own name — direct ownership of the shares, not units of a pooled fund.
A PMS is a SEBI-registered service in which a portfolio manager runs a tailored basket of stocks for you — typically 15 to 30 names — inside an account opened in your own name. You keep direct ownership of every share, see each trade and fee, and the capital-gains tax sits with you, not behind a fund wrapper. In return for that transparency and customisation, the entry is high: ₹50 lakh, and the manager must hold a net worth of at least ₹5 crore to be registered at all.
A portfolio held in your own account
A PMS runs a tailored basket of 15 to 30 stocks inside an account opened in your own name, so you keep direct ownership of every share rather than units of a pooled fund. You see each holding, each trade and each fee at the security level.
That transparency comes at a high entry: ₹50 lakh, with the manager required to hold a net worth of at least ₹5 crore to be registered at all.
You own the actual shares.
This is the fact everything else hangs on. In a mutual fund your money joins a common pool and you receive units; the fund owns the securities. In a PMS the securities are bought in a demat account that carries your name. Nothing pools. If you opened the statement today you would see Reliance, HDFC Bank, a mid-cap you have never heard of — the real lots, the real quantities, bought on the dates the manager bought them.
That ownership is ring-fenced by design. An independent custodian settles every trade and holds the assets, the manager simply instructs; the two roles are deliberately separate. Were the manager's firm to wind down, your portfolio does not get caught in the estate — it is already yours, sitting in your account. SEBI backs this with audited, security-level reporting rather than a single end-of-day NAV.
The trade-off is concentration. A PMS usually holds 15 to 30 stocks, not 50, so each position carries weight and the manager's conviction shows up plainly in your returns — for better and for worse. You are buying judgement applied narrowly, and you can see exactly how it is being applied.
You fund the account
₹50 lakh+ as cash, securities, or both — into a demat and trading account in your own name.
A manager builds it
A registered portfolio manager buys 15–30 stocks to a stated strategy and your mandate.
You own the shares
Every share sits in your demat; you see each holding, each trade, each fee, directly.
Three mandates, three levels of control.
Every PMS runs under one of three mandates, set in writing before a rupee is deployed. They differ only in one thing — how much say you keep over each individual trade — but that one thing reshapes the whole experience.
Discretionary
You hand the manager a written mandate and they buy and sell within that strategy without checking each trade with you. The default, and the bulk of the industry — you are buying the manager's judgement, not approving it order by order.
Most commonNon-discretionary
The manager researches and recommends, but every order waits for your sign-off before it goes to market. More control, more friction — and your reaction time becomes part of the return.
You approve each tradeAdvisory
Pure advice. The manager builds the ideas; you place every trade yourself through your own broker. Closest to a research subscription with a portfolio wrapped around it.
You executeThree ways a PMS charges.
PMS pricing comes in three shapes. Two terms decide whether a performance fee is fair: the hurdle rate — the return you must clear before the manager shares in gains — and the high-water mark, which records your portfolio's previous peak so you are never charged twice for climbing back over the same ground.
A flat annual charge on the value managed, billed regardless of performance. Predictable, but you pay it in flat and down years too.
A smaller fixed fee plus a slice of gains above a hurdle. The structure most Indian HNIs actually pick — it splits the risk between you and the manager.
No fixed fee; the manager earns only on gains beyond an agreed hurdle rate, protected by a high-water mark so you never pay twice for the same recovery.
On top of whichever model applies, you also bear GST, brokerage and custodian charges, plus any exit load in the early years. The headline rate is rarely the whole bill — read the disclosure document.
Every sale is yours to declare.
In a mutual fund, the fund can churn inside the wrapper and you are taxed only when you redeem units. A PMS has no such wrapper. Because the shares are yours, every sale the manager makes is a taxable event in your hands the moment it happens — gains flow to your return, lot by lot.
| On each sale | Holding period | Indicative rate (FY2025-26) |
|---|---|---|
| Short-term capital gain | Listed equity held ≤ 12 months | 20% |
| Long-term capital gain | Listed equity held > 12 months | 12.5% over ₹1.25 lakh / year |
| Fund-level shielding of churn | Not available | None — tax follows every trade |
The practical effect: a high-turnover PMS can hand you a meaningful tax bill in a strong year even if you never withdrew a rupee. A patient, low-churn strategy leans on the long-term rate and defers far more. Rates are indicative — confirm your own position with a tax adviser.
Who a PMS fits — and who it doesn't.
- You can commit ₹50 lakh and it is genuinely surplus, long-horizon capital
- You want a concentrated, conviction-led book — not another index in disguise
- You value seeing every holding, trade and fee at the security level
- You want a portfolio shaped to your mandate — sectors, exclusions, existing positions
- You need daily liquidity or may have to redeem at short notice
- ₹50 lakh would be a large share of your investable wealth
- You would rather not handle per-trade capital-gains tax admin yourself
- You prefer the built-in diversification of a 50-stock pooled fund
A mutual fund gives you units. A PMS gives you the actual shares.
That single fact drives everything downstream — concentration, transparency, customisation and how your tax is calculated, trade by trade. It is also why the entry sits at ₹50 lakh rather than the price of one unit.
Built for surplus, long-horizon capital
A PMS suits you when ₹50 lakh is genuinely surplus, long-horizon capital and you want a concentrated, conviction-led book rather than another index in disguise. You value seeing every holding, trade and fee, and a portfolio shaped to your own mandate.
Look elsewhere if you may need to redeem at short notice, or would rather not handle the per-trade capital-gains tax that comes with owning the shares directly.
Questions investors actually ask.
What is the real minimum to start a PMS?
₹50 lakh, the SEBI floor raised from ₹25 lakh in January 2020. It can be brought as cash, as an existing portfolio of securities, or a mix — but the value must clear ₹50 lakh at onboarding.
Where do my shares actually sit?
In a demat account opened in your own name. Your capital is never pooled with other clients; an independent custodian handles settlement, and you can see each holding directly. If the manager's firm were to fail, your securities remain yours.
Who decides what gets bought and sold?
It depends on the mandate. Under a discretionary PMS the manager trades within your agreed strategy without per-order approval; under non-discretionary you sign off each trade; under advisory you place every order yourself.
How is a PMS taxed?
Because you own the underlying shares, every sale the manager makes is a taxable event in your hands — short-term or long-term capital gains depending on the holding period of each lot. There is no fund-level wrapper to defer the tax on churn, so a high-turnover strategy can carry a real tax cost.
What does a PMS cost beyond the headline fee?
On top of the fixed or performance fee you bear GST, brokerage, and custodian charges, plus any exit load in the early period. Always read the fee schedule and the disclosure document before signing.
How often will I see the portfolio?
Managers issue a monthly factsheet plus a full statement of holdings and transactions, and most also give you a live login. Reporting is at the security level — not a single NAV line.
Related guides.
PMS vs Mutual Funds
Units versus shares, cost versus control — the comparison in full.
Read guidePMS fees, in detail
Fixed, hybrid and performance models, with hurdle rates and high-water marks worked through.
Read guideWho should invest
Match ₹50 lakh, horizon and risk appetite to the right product.
Read guideSee every PMS, scored.
Educational content only — not investment or tax advice. Figures are indicative and current to FY2025-26; verify specifics, especially tax, with a qualified adviser. PMS, AIF and GIFT City investments are subject to market risks, and past performance does not indicate future returns.