Portfolio management services


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An introduction to Portfolio Management Services. A smart way of allowing the experts to manage your investments in equities and debt.

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Portfolio management services

  1. 1. 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.
  2. 2. 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.
  3. 3. 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.
  4. 4. 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.
  5. 5. 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.
  6. 6. 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.
  7. 7. 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.
  8. 8. 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.
  9. 9. 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.
  10. 10. 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.
  11. 11. 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.
  12. 12. 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.
  13. 13. 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.