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

Low Credit or No Credit – Get Bad Credit Car Loan
Published by Bruce Farmer on May 16th 2012 | Finance
A first time car buyer finds the task of buying a vehicle a daunting task. The huge auto industry gi...
 
Transaction activities under great supervision of bookkeeping for countless profits
Published by Nelson on February 2nd 2012 | Finance
Complete End to End Business Solution offering various services such as Incorporation, Bookkeeping, ...
 
How to Get Paid the Top Dollar for Your Unwanted Gold
Published by Devan Peter on May 22nd 2012 | Finance
We buy gold jewelry and coins with the intention of beautifying or for safekeeping. Ever since time ...
 
Car Leasing Firms in the Market
Published by Freddie Wade on May 11th 2012 | Finance
As more cars are manufactured, there would be a never ending business for car leasing firms unless c...
 
How to Get Fast Personal Loans
Published by Vikash Kumar on May 8th 2012 | Finance
In today’s society no one has the time and patience to wait for anything, much less, ‘queue up...
 
Payday Loans No Debit card: a Modern approach to help you!
Published by Alisa Alison on June 2nd 2012 | Finance
Payday loans no debit cards are the quickest services facilitating borrower to meet urgencies withou...
 
Debt Relief San Diego- Manage Financial Crunch
Published by Chris Adam on February 9th 2012 | Finance
If your financial position does not show a pretty picture, there is not need to panic yet; everyone...
 
Agreement with Your Creditors during Debt Settlement
Published by Rajkumar Kaushal on June 23rd 2012 | Finance
Making use of credit facility has become what is making the world become more digitized because of i...
 
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...
 
Beginners Guide to Currency Converting
Published by Garreth Stover on December 20th 2011 | Finance
For people who need to deal with different currencies all the time whether to complete business tran...
 
Jobs rise in four months good sign for economy
Published by David Hurley on February 23rd 2012 | Finance
The condition of the job market of UK is on a high from the past four months. This means that the ec...
 
Bookkeeping is the most essential a part of the accounting and records maintenance
Published by Nelson on March 23rd 2012 | Finance
Complete End to End Business Solution offering various services such as Incorporation, Bookkeeping, ...
 
Pounds till payday: fast cash for your entire crisis
Published by Adan Thomas on May 15th 2012 | Finance
Whenever you are in fast demand of funds and can’t wait for your payday then pounds till payday lo...
 
Short Term Loans : for Short Term Reprieve
Published by Annisa Nelson on February 14th 2012 | Finance
Short terms loans can be dicey. Since the rate of interest charged is very high, it means that if th...
 
Unseen charge for tickets to be barred
Published by Grace Bay on January 4th 2012 | Finance
Travelling companies are suggested to block the practice of unseen charges for passengers who prefer...
 
British gas will make customers home green
Published by Ross Sorin on February 28th 2012 | Finance
After the failure of Britain’s housing stock, the government is all set with a new deal claiming t...
 
Maintain expenses and profit with regular Bookkeeping services
Published by Nelson on April 19th 2012 | Finance
Complete End to End Business Solution offering various services such as Incorporation, Bookkeeping, ...
 
Tough times ahead of Investment banks with less profit
Published by Look Right on February 20th 2012 | Finance
Investment banking business in wake of implementation of Basel 2.5 norms is going to face another ye...
 
Currency Converters overview
Published by Garreth Stover on January 2nd 2012 | Finance
Countries have their own currencies to use in buying, selling, and trade. When traders from differen...
 
Why is it best to opt for fixed annuity and the deferred annuity
Published by Robert Jhonson on March 20th 2012 | Finance
The annuity is the best investment that you can possibly make while you are still employed....
 
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...