Portfolio Management Services

In a Portfolio Management Service, a SEBI-registered portfolio manager invests on your behalf according to an agreed strategy. Unlike a mutual fund, there is no pool: the securities are bought in your own demat account, held by a custodian, and you see each holding and each trade. That direct ownership is the defining feature — and the source of most of the differences in cost, tax and reporting.

SEBI's portfolio manager regulations set a minimum investment of ₹50 lakh per client, which can be brought in as money, as securities, or both. Some exemptions apply to accredited investors.

Note: In July 2026 SEBI consulted on changes to the portfolio management framework, including a lower minimum for a proposed category of PMS that would invest in mutual funds. The ₹50 lakh minimum applies under current rules — check for updates.

• Discretionary — the portfolio manager decides what to buy and sell, within the agreed strategy. This is the most common form.
• Non-discretionary — the manager suggests; you approve each decision before it is executed.
• Advisory — the manager advises; you decide and execute yourself.

Portfolio managers may charge a fixed fee (a percentage of assets), a performance fee (a share of returns above a hurdle, usually subject to a high-water mark), or a combination. Other costs — custody, brokerage, fund accounting, and exit charges in the early years — come on top. Ask for a fee illustration showing what you would pay at different return levels; the agreement and disclosure document must set out every charge.

• Read the disclosure document — strategy, risks, fees, the manager's background and any regulatory actions.
• Understand the strategy — how concentrated it is, how it buys and sells, what it avoids.
• Look at performance carefully — SEBI requires portfolio managers to report returns on a standardised basis against benchmarks. Look at the full record, including bad years, not a single period.
• Check the people — who runs the money, and what happens if they leave.
• Know your exit — exit charges, notice periods and how securities can be transferred out.

Your securities are held by a custodian, and you receive regular statements of holdings, transactions and fees, along with periodic performance reports. If you leave, the portfolio can usually be redeemed in cash or, in many cases, transferred to your own demat account as securities. Selling to raise cash creates tax events; transferring securities may not. Check how long redemptions take and what exit charges apply in the early years.

Investors with a substantial, long-horizon equity allocation who want direct ownership and a concentrated, professionally managed strategy — and who are comfortable with higher volatility, higher costs and more tax events than a diversified mutual fund.

CompoundX helps you understand how a PMS would fit with the rest of your wealth — using Portfolio X-Ray to see your existing concentration and overlap first. If you'd like to explore PMS, request a conversation with a CompoundX expert. CompoundX is not a portfolio manager.

A performance fee is typically a share of returns above a hurdle rate. A high-water mark means the fee is charged only on gains above the portfolio's previous peak value, so you don't pay twice for recovering the same ground.

For illustration, assume a 10% hurdle and a 20% share above it. If the portfolio gains 15% in a year, the fee applies to the 5% above the hurdle — 1% of the portfolio — before other charges. Hypothetical numbers only; each agreement defines its own terms.

Because you own the securities, every sale the manager makes creates capital gains in your name, taxed according to the holding period of that security. Dividends are taxed at your slab rate. Fees may or may not be deductible against gains depending on the provisions in force. You receive statements to support your return, but the tax liability is yours.

Tax rules change and depend on your circumstances. This is general education, not tax advice — check the latest provisions or speak to a tax professional.

Portfolio managers report returns on a time-weighted basis, which removes the effect of when clients added or withdrew money. Your own experience is better measured by XIRR, which accounts for your actual cash flows. Compare with an appropriate benchmark, and look at drawdowns as well as returns. Use the XIRR explainer to see why the two can differ.