Article Side

Online Article Directory!

Hello Guest! Login or Register to submit articles!

How to choose a best Portfolio Management Scheme?

By Ramalingam K Subscribe to RSS | May 4th 2012 | Views:
loading
 
  



There are so many Portfolio Management Schemes in the industry. So it is really very difficult to choose a good Portfolio Management Scheme provider. Here are some factors to be considered before choosing a Portfolio Management Scheme.

1) Yardstick for Performance:

One should not just go by the past performance alone. Making an analysis on various Portfolio Management Schemes in the industry with their past performance along with the risk adjusted return and the consistency of performance will be useful in selecting the best Portfolio Management Scheme.

2) Minimum Investment Criteria:

Investors need to avoid Portfolio Management Schemes where the minimum investment is less than 25 lacs. Even there are Portfolio Management Scheme operators who keep minimum investment for their schemes as low as 5 lacs. But these kinds of Portfolio Management Scheme operators will have more number of PMS accounts. When the quantity (the number of PMS Acs) goes up the quality (the performance) may relatively come down.

Therefore it is better to choose a Portfolio Management Scheme where the minimum investment is 25 lacs or more. So that our PMS Ac will be directly handled and managed by the top level portfolio manager and not managed by the juniors and analysts. If you are planning to invest less than 25 lacs, then the ideal investment product for you would be mutual funds.

3) Conflict of interest:

Portfolio Management Schemes have been run by some stock broking companies as well as investment management companies. There is a conflict of interest in Portfolio Management Schemes run by share broking companies. The main business of a share broking company is to earn commission income by facilitating the share market transactions.

Portfolio Management Scheme is an additional business for them. It is not their core business. Hence there may not be enough focus on the Portfolio Management Scheme business. Also they may indulge in doing undue and unnecessary churning of the clients’ portfolio to earn more commission income. This will cause additional expenses and short term capital gain tax to the client.

The core business of investment management companies is managing the investments of their clients to earn management fees. So, with the Portfolio Management Schemes run by investment management companies, there is no conflict of interest or vested interest. Therefore it is always advisable to choose a Portfolio Management Scheme offered by investment management companies.

4) Role of Professional Financial Planners:

A professional financial advisor or financial planner will study and analyse the Portfolio Management Schemes run by various stock broking companies as well as investment management companies. If we approach them, they will guide us in choosing the right Portfolio Management Scheme depending upon our requirements and other factors.

Also a professional financial advisor will continuously monitor the performance of various Portfolio Management Schemes and advice the client on a regular basis on the performance of the Portfolio Management Scheme where the client has invested vis a vis the other PMS schemes in the industry. After a certain period, if necessary he may advice you to move from one Portfolio Management Scheme operator to the other.

ESOPs and Portfolio Management Scheme:

ESOPs are provided by the companies to its employees based on their service. Most of the employees are of the opinion of keeping the ESOPs as it is forever because it is their company shares. But logically it is too riskier to invest in a company to whom you work for. Because, your employment income as well as investment income will depend on the performance of a single company.

So it is not advisable to keep your investments in a company where you actually work. So it is at all times advisable to transfer your ESOPs to a Portfolio Management Scheme. They will revamp it to construct a well diversified portfolio.

Portfolio Management Scheme is an aggressive investment product and really suitable for those investors

• Who have a share portfolio and find it difficult to manage.

• Who have enough exposure in Mutual funds and looking for a different and good investment option

• Who have sizable ESOPs.

Ramalingam K - About Author:

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in.

Share on Facebook Tweet It Stumbleupon this post This post is delicious !

Article Source:
http://www.articleside.com/finance-articles/how-to-choose-a-best-portfolio-management-scheme.htm

Related Finance Articles Subscribe to RSS

Problems That Result into Inaccurate Payroll Results
Published by Suree Martin on February 3rd 2012 | Finance
Everyone understands the importance to have timely and accurate payroll solutions. This helps a comp...
 
Payday Loans Canada : Timely Monetary Help
Published by Lily Jacobs on March 20th 2012 | Finance
One must go in for this type of lending scheme only when it is of absolute necessity. The servicing ...
 
Instant Loans: Faster solution in modernization
Published by Alston Roy on June 5th 2012 | Finance
These loans are very fast to avail and provide people with quick money. It helps them to overcome th...
 
Regulatory Crackdown for UK Wealth Mangers
Published by Kevin Cook on May 9th 2012 | Finance
UK investment managers are risking fines, career-long bans and even jail time by unwittingly breakin...
 
Tips to Keep in Mind when Comparing Home Mortgages
Published by Jess Hall on November 29th 2011 | Finance
If you feel overwhelmed when you are shopping for mortgage loans, you are not alone....
 
Can You Do-It-Yourself During Settlement of Debt?
Published by Rajkumar Kaushal on August 21st 2012 | Finance
There are lots of debts firms these days that are into the business of debt settlement. Debt Settlem...
 
Plan your finances and live in peace
Published by Pramod Kumar Singh on May 23rd 2012 | Finance
If you plan your finances well and save as well as invest your money smartly, you can not only have ...
 
In Nevada information about auto insurance is crucial
Published by Alabamaauto Insurances on January 17th 2012 | Finance
It’s not very hard to get cheap rates for auto insurance in the state of Nevada as there are a lot...
 
Find a Debt Management Program That is Right for You
Published by Fred Lannister on April 22nd 2012 | Finance
Presidents Day is oftentimes referred to as the Black Friday of February, since you can get great of...
 
In today's world Supplier Management Innovations
Published by Jack Sparow on June 26th 2012 | Finance
What's going to an ordinary inventory supervisors opportunity appear to be like from few years? For ...
 
Compare Saving Accounts
Published by Ratechoice on May 17th 2012 | Finance
RateChoice provides users with a comparison of the key features, fees and rates of different financi...
 
Credit Card Settlement Services: Saving People from Financial Quicksand
Published by Will Philip on February 28th 2012 | Finance
Not all commodities can be paid using cash; in some cases, one has to use a credit card to purchase ...
 
Binary Options Broker- Know How to Pick the Best One
Published by Binaryoptionbrokerz on August 18th 2012 | Finance
Today’s market provides Digital options trading or online trading. In fact, digital options tradin...
 
Understanding Tax Liabilities
Published by Clemencia Summers on May 18th 2012 | Finance
Tax is a definite portion of the income of an individual or business that the government regularly d...
 
Text Loans Bad Credit- reasonable schemes in order to avail a healthy life
Published by Calvien Peter on December 2nd 2011 | Finance
Text Loans Bad Credit is resources designed for folks who want to live a debt free life on getting t...
 
Ideas on Income Management
Published by Deby Suportie on May 3rd 2012 | Finance
Money management is route to financial freedom. The following sentences refer to quick tips on how t...
 
How can I get Debt Reduction? How can a debt plan help me repay my debts?
Published by Deby Suportie on March 28th 2012 | Finance
Debt reduction is a program provided by debt companies so that those who are struggling with debts c...
 
Guidelines for Private Student Loan Consolidation and Defaulted Loans
Published by Michelsmith on December 8th 2011 | Finance
Read this article to know guidelines for Private Student Loan Consolidation and Defaulted Loans....
 
This is how procurement outsourcing make it easier for enterprises double cash
Published by Jos Trott on June 28th 2012 | Finance
Delicate companies have many differing solutions to management. Essentially the most efficient possi...
 
Repairing Vendor Management
Published by Art F Rivera on June 28th 2012 | Finance
Irrespective if an institution could looking to find broken wares in addition to wanting methods to ...
 
The Benefits of Financial Advice Leeds
Published by Fredrick Gavin on August 24th 2012 | Finance
You work hard for your money and you therefore need to ensure that you properly manage it so that yo...
 
The Benefits of Financial Advice Leeds
Published by Fredrick Gavin on August 24th 2012 | Finance
You work hard for your money and you therefore need to ensure that you properly manage it so that yo...
 
Pensions in Leeds
Published by Fredrick Gavin on August 24th 2012 | Finance
Pension is a money received after retirement or end of a work agreement. It is mostly associated wit...
 
Pensions in Leeds
Published by Fredrick Gavin on August 24th 2012 | Finance
Pension is a money received after retirement or end of a work agreement. It is mostly associated wit...
 
Pension in Leeds
Published by Fredrick Gavin on August 24th 2012 | Finance
Leeds has many financial advisors especially those dealing with pension. Pension is very important e...
 
Pension in Leeds
Published by Fredrick Gavin on August 24th 2012 | Finance
Leeds has many financial advisors especially those dealing with pension. Pension is very important e...