Portfolio management service is a unique customized fund management service which is typically offered to high net worth and ultra-high net worth investors. The costs in equity portfolio management service are higher than in mutual funds, but this is because there’s higher customization available in portfolio management services (PMS) than in mutual funds which usually gives a blanket portfolio that is created at a macro level. Let us study about PMS in details.

Features

Allocation of Assets

This is the primary feature of equity portfolio management services where assets having low correlation with each other are mixed in a certain way so that the risk and return profile of the investors having huge risk appetite can settle for a more volatile group while the risk-averse investors can go for subtle/stable investment classes.

Diversification of Investment

Portfolio manager predicts how an asset class is going to behave or return over a longer period of time with the various ambiguities in the market. The managers divide the amount invested in different asset classes that are least correlated with each other.

Asset Rebalancing

Since the market is not the same every year; so there’s a need to rebalance the asset according to the market prediction for a similar period. Another scenario is the ratio of asset classes in the portfolio changes over the period of time on its own due to the accumulated returns. Thus, the portfolio manager keeps an eye on the portfolio, and whenever they feel that the portfolio has crossed the level of the investor’s risk appetite, they rebalance it accordingly.

Benefits

Maximum Return

When you hire a prudent portfolio manager, they optimize and maximize the returns on your portfolio. There are different types of returns; they can be either short-term or long term returns, which go according to the goals of the entity.

Reduces Risk

The market is volatile in nature, and thus, the most attractive asset class poses a higher level of risk as well. But with correct portfolio management, the risk can be reduced while maximizing the profit with proper diversification and asset allocation.

Correction of Portfolio

Since the market is volatile in nature, so if the portfolio fails to make the returns according to the anticipated values, the portfolio manager can correct and rebalance it at any point in time to reduce the risk and maximize the returns.

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