The document outlines the investment process involved in portfolio management services (PMS), detailing the distinction between discretionary and non-discretionary services. It emphasizes the expertise required for managing portfolios, including asset allocation, understanding investor needs, and market dynamics. Additionally, it presents Munoth Financial Services Limited (MFSL) as a provider of PMS, offering customized investment strategies and a robust infrastructure to support investors in navigating capital markets.

2. Basics | Investment Process | Potential for growth | conclusion
Introducing Portfolio.
• Portfolio is an investment into
instruments like equities,
derivatives, debts, bullion or
combination of few or all of them.
• Managing portfolio is a full-time
task & requires expertise of
identifying, evaluating,
comprehending and foreseeing
significant growth in revenues &
profits of companies.
• The art and science of following
markets successfully require
formal education, years of
experience, deep understanding
of fundamental and technical
analysis tools, up-to date market
intelligence and more.

3. Basics | Investment Process | Potential for growth | conclusion
Broad categories of Portfolio accounts.
o Non – Discretionary services: The task of PMS service
provider is to execute the instruction of clients and maintain
books of accounts of the client. All decisions of buying and
selling is made by the client. The PMS provider however gives
suggestions and recommendations to the client on his or her
investment decisions.
o Discretionary services: The PMS service provider
tailor
makes the portfolio allocation, and makes judicious buy and sell
calls on behalf of the investor and depending on his return
expectations, risk taking capacity, tenure of investments, choice
of asset classes like equity, debt, etcetera, and so on.
MFSL offers both discretionary and non-discretionary PMS facility.

4. Basics | Investment Process | Potential for growth | conclusion
Role of a Portfolio Manager.
o Understanding investor
needs and suitably making
asset allocations.
o Defining investment rules.
o Transacting trades with stock
broker and maintaining DP
account, books of account,
bank account on behalf of
the customer.
o Reporting to investor on
periodic basis on
performance of his or her
portfolio.
o Complying with all statutory
laws including audit on
behalf of the investor
Portfolio manager typically charges a small fee and
share in profits to its client.

5. Basics | Investment Process | Potential for growth | conclusion
Steps in creating a Portfolio.
o Asset allocation Process.
o Fixing Investment rules within every
o
o
o
o
asset category.
Defining universe of stocks which
qualify for investments.
Ranking of universe in terms of
potential for growth.
Buying & selling activities based on
fundamental and technical analysis,
news, estimated trends and so on.
Continually review asset allocation,
universe, ranking based on market and
business dynamics.
Infrastructure to support Portfolio includes investment in PMS software, technical
analysis software, subscriptions for primary fundamental data, news, etc.

6. Basics | Investment Process | Potential for growth | conclusion
Where to invest.
Asset allocation | Universe creation | Transaction | Constant review
Return
expectancy
Risk taking
capacity
Tenure of
investment
• Based on understanding of investor’s income sources,
estimated future expenditure, liquidity requirements, etc.
• Based on investor’s appetite for risk considering his or her age,
other businesses, family dependency, estimated future
commitments and so on.
• Based on investor’s requirement for funds for a future business,
buying an asset or incurring expenditure.
A scientific allocation in equity or debt is made after above brain storming
exercise with the investor.

7. Basics | Investment Process | Potential for growth | conclusion
Fixing exposure limits.
Asset allocation | Universe creation | Transaction | Constant review
o Within every asset category, define minimum and maximum
exposure for investments –
o Industry wise – limits defined for overall exposure in an
industry as well as limits could also be defined for minimum
exposure for better performing industries and vice versa.
o Company wise – similar exposure limits to be defined for
investments in a company [within the overall industry limit].
o Business house – overall ceiling for investments in any single
business house.
The main purpose of asset allocation and setting up exposure limits is to
spread the risk.

8. Basics | Investment Process | Potential for growth | conclusion
Which securities to invest.
Asset allocation | Universe creation | Transaction | Constant review
• Trustworthy
management
• Market liquidity
• Increased trading
activity
QUALITY
SIZE
• Minimum defined
revenue
• Minimum defined
market capitalization
• Growing company
• Good fundamentals
• Prospects and
industry trend
GROWTH
This step involves filtering of all listed companies which do not justify
investments at this moment. The process needs to be reviewed periodically.

9. Basics | Investment Process | Potential for growth | conclusion
Ranking the universe.
Asset allocation | Universe creation | Transaction | Constant review
o Parameters considered for internal ranking –
o Return on total capital employed – Fastest growing companies
usually are into good businesses.
o Recent performances – Performance in the latest quarter and
Trailing Twelve Months.
o Price Yield – Ideally lower PE has better prospects for increase in
market price if other parameters are favorable.
o Estimated earning – based on industry trends, company specific
news, foreign exchange exposure, etc.
A proprietary model for ranking is done giving varied weightages to above
parameters. Ranking is reviewed every fortnight as dynamics change.

10. Basics | Investment Process | Potential for growth | conclusion
When to buy & sell?
Asset allocation | Universe creation | Transaction | Constant review
Internal ranking
Chart study
Buy &
sell
decision
News & expectations
Timing the market is most vital activity. Most of the funds, performing good
and bad hold similar stocks. The entry and exit price makes all the difference.

11. Basics | Investment Process | Potential for growth | conclusion
Dynamics change fast.
Asset allocation | Universe creation | Transaction | Constant review
o Markets immediately react to company or industry news, rumors,
demand, supply, changes in global bourses or foreign exchange,
Indian & International political changes, economic policy changes,
and more.
o Portfolio managers or direct investors needs to have access to
such information and implication on prices of respective securities
in the stock market.
o Changes can include or remove some securities from the
universe of eligible stocks for investments and also change their
internal rankings.
Ever changing facet of the market has become even more dynamic thanks to
globalization, FII investments and increased dependences with other countries.

12. Basics | Investment Process | Potential for growth | conclusion
Good returns in long run.
o India offers tremendous potential because
o Its growth is far from reaching the saturation levels.
o Infusion of foreign funds is helping GDP growth.
o Early lead in technology and IT spectrum giving FE revenues.
o Healthy banking and legal system propagates confidence.
o Natural resources, huge educated middle class population,
ushers a confidence for India’s growth story in the long run.
In any market condition, some securities are under priced. Investing in them
will repay handsome returns, whenever the market corrects the stock valuation.

13. Basics | Investment Process | Potential for growth | conclusion
It is good to go for a PMS account.
o Globally, most of the investors do
not manage investments directly
as it requires tremendous
knowhow and full time
involvement.
o Small investors deploy through
mutual funds while High Networth
Investors invests through Portfolio
Management Service providers.
o The primary difference between
mutual fund and a PMS account
is that PMS is customized as per
investor preferences and
requirements. Mutual fund, on
other hand, is pre-structured.
A license from SEBI is mandatory to offer Portfolio Management Services in India.

14. Allow the experts to handle. See your money grow.
Munoth Financial Services Limited (MFSL) incorporated in 1990 is a widely held Public Limited Company.
MFSL is a Merchant Banker, a member of the National Stock Exchange (NSE), Madras Stock Exchange (MSE), and
Depository Participant (DP) with NSDL and also provides Portfolio Management Services (PMS). It is registered
with Securities and Exchange Board of India (SEBI) to provide all these services.
MFSL is empanelled with many leading banks and insurance companies for stock broking business. The company
has been associated with over 100 IPO’s. MFSL is the Investment Managers to Bangalore based Valmark Infra &
Realty Trust, a Category II SEBI registered AIF fund into real estate.
MFSL offers internet & mobile based trading platform incorporating the newest technology and is amongst the very
few entities to also offer IPO & mutual fund online.
The company has qualified and trained manpower which comprises of Chartered Accountants, Company
Secretaries, Cost Accountants and Management Graduates. It has the right mix of qualified and experienced
personnel to provide effective and efficient service, backed by state of art infrastructure.
Contact us for more information on Portfolio Management services.
HQ: Munoth Centre, 343 Triplicane High Road, Chennai 600 005.
Landline: +914428591185 | Fax: +914428591189 | Email: info@munothfinancial.com
Investments in capital markets are subject to market risks. Please read
PMS related documents carefully.
Join the bus now.