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absolut
Groupie
Joined: 18/Jun/2007
Location: India
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Posts: 66
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   Topic: Portfolio Management Service
Posted: 20/Jun/2007 at 4:05pm |
from computers to pizzas everything is getting personalised . So why the equity markets be behind ? this personalised service in the markets would probably be PMS ( Portfolio Management Service ) . It is usually a more concentrated porfolio of stocks than the MFs . The over all corpus size is also lesser ...which probably gives it more flexibility and more over a PMS fund manager is not hand tied like the MF fund manager by SEBI .... but the only problem with PMS is that it has a high ticket size ... but as far as returns are concerned their a better than MFs .... more over after redeeming the PMS you can choose to hold the stocks ... so its like owning them ....any body with real time PMS expeience ..any comments ????
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basant
Admin Group
Joined: 01/Jan/2006
Location: India
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Posts: 18403
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Posted: 20/Jun/2007 at 4:10pm |
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The cut that the manager takes is too high. They take 25% of profits after a hurdle rate of 8%.
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smartcat
Senior Member
Joined: 29/Mar/2007
Location: India
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Posts: 4243
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Posted: 20/Jun/2007 at 4:48pm |
Investing in PMS gives the investors a big ego boost. The idea is - Wow! Kotak thinks I'm so important that they want to manage my money.
It is much 'cooler' to say - 'HSBC is managing my money' than to say 'I'm investing in HSBC Mutual Fund'.
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absolut
Groupie
Joined: 18/Jun/2007
Location: India
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Posts: 66
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Posted: 20/Jun/2007 at 6:02pm |
And I think that is totally fair . Remember the Maslow`s hierarchy , people at the `` self esteem `` category would like to have such services . A recent look at the numbers of HNIs in India will exactly give why PMS is sucessful and worth it . Here the investor gets directly to interact with the fund manager which is better than talking to a dealer . Lot of people now have the money , the authority and the need ( MAN ) but no time or perhaps modicum of expertise . So why not get an expert on the table . It might be a bit costly but then it is not meant for all . an anlogy probably would be although Maruti is the market leader why do you think Audi, Merc , Rolls Royce are foraying into India . And these are perfect triggers for a growing economy .
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kulman
Senior Member
Joined: 02/Sep/2006
Location: India
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Posts: 9319
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Posted: 20/Jun/2007 at 12:59pm |
New TEDies may wish to see why PMS mostly means "Pyaar-se Maaro Scheme" by clicking here.
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Life can only be understood backwards—but it must be lived forwards
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Shankru
Newbie
Joined: 26/Jun/2007
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Posts: 21
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Posted: 04/Aug/2007 at 10:10pm |
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I have invested in Kotak PMS in October 2006. The scheme has given me a post tax return of 2% as on 31st March. I am hoping they will turn around fast. It is very difficult to understand their stock selection process and the relationship manager simply forgets you after the cheque is collected! They don't bother to get in touch with the client and explain why the fund is under-performing.
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I know it's all Maaya
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kulman
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Joined: 02/Sep/2006
Location: India
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Posts: 9319
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Posted: 04/Aug/2007 at 10:28pm |
Shankru
Ohhh....so sorry to hear that. Maybe they already knew about your tagline!
On a serious note, I know many people who have similar experience even with other PMSs. They must have charged you management fee upfront and churned & turned the scrips in your portfolio many times over to generate brokerage! (the fund manager must have been promoted for his skills)
I may sound a bit harsh to the people who are employed in this industry, but fact is that PMS clients are dissatisfied. I don't wish to put names on this forum but there are examples involving lots of big brokerages.
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Life can only be understood backwards—but it must be lived forwards
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kulman
Senior Member
Joined: 02/Sep/2006
Location: India
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Posts: 9319
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Posted: 10/Aug/2007 at 12:16pm |
"In 2006, promises and fees hit new highs. A flood of money went from institutional investors to the 2-and-20 crowd. For those innocent of this arrangement, let me explain: It’s a lopsided system whereby 2% of your principal is paid each year to the manager even if he accomplishes nothing – or, for that matter, loses you a bundle – and, additionally, 20% of your profit is paid to him if he succeeds, even if his success is due simply to a rising tide. For example, a manager who achieves a gross return of 10% in a year will keep 3.6 percentage points – two points off the top plus 20% of the residual 8 points – leaving only 6.4 percentage points for his investors. On a $3 billion fund, this 6.4% net “performance” will deliver the manager a cool $108 million. He will receive this bonanza even though an index fund might have returned 15% to investors in the same period and charged them only a token fee."---Warren Buffet
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