MC Markets GraphicsStory: PMS Funds: The High Cost of Profitability

 MC Markets GraphicsStory: PMS Funds: The High Cost of Profitability

Portfolio managers charge three different sorts of fees for their services: fixed only, profit-sharing alone, and hybrid. Out of the three available fee types, a fixed fee is assessed either quarterly or monthly based on the average portfolio value.

Approximately 100 funds alone provide the hybrid option; 58 exclusively provide the fixed option; and 7 only provide profit-sharing as the sole choice for fees.

One way to think about specialist investing services like PMS (Portfolio Management Services) is like mutual funds' more sophisticated relative.

The minimum investment required for PMS funds, which are intended for the wealthy, is Rs 50 lakh. These services provide a distinctive method of building wealth while taking the client's investing preferences into consideration. In general, PMS fund managers don't hesitate to take on a little bit more risk in order to reap more gains.

Portfolio managers charge three different sorts of fees for their services: fixed only, profit-sharing alone, and hybrid. Out of the three available fee types, the fixed fee is assessed either quarterly or monthly based on the average portfolio value.

A yearly performance fee is assessed under the profit-sharing plan if the portfolio outperforms the "hurdle rate".

The portfolio manager collects both fixed and profit-sharing fees for hybrid fee arrangements.

PMS funds, like mutual funds, provide regular and direct programs. After analyzing 349 regular funds (distributed by distributors and usually with higher costs), PMS Bazaar discovered that 184 funds have all three PMS charge alternatives, allowing investors to choose any one.

Only the hybrid option is provided by over 100 funds, but only fixed and profit-sharing are offered by seven funds as a fee choice.

Investors may be required to pay extra costs in addition to the fees, which may or may not be included in the fund management charges. Examples of these charges include running expenditures and custody fees.