A Guide To Portfolio Management Services

How is a portfolio model built?

A common aspect of equity portfolio management is building and maintaining a portfolio model. It often involves running one or many portfolios in one equity investment product. The individual portfolios are matched against the portfolio model. A portfolio manager assigns every stock in the portfolio model a percentage weighting. It is followed by modifications of individual portfolios for matching against the weighting mix. Portfolio management services are for you if you are an investor looking for someone to help or handle your investments. Here is a summary of what you need to know about these services.

What are these services?

This is a professional service provided by portfolio managers, who are qualified and experienced, with a research team, to manage equity portfolios like stocks, fixed income, debt, cash, structured products, and several individual securities instead of investors or clients themselves. They help clients in achieving their investment goals with the required return rate.

How many types of portfolio management servicesare available?

There are many types of best portfolio management services available in the market. Four basic ones are discussed below:

  • Active Portfolio Management: This type provides clients a higher return over the market. In this type,there is a more significant role for fund managers. They ought to be active and calculate market trends before taking any decision.
  • Passive Portfolio Management: It follows benchmark indexes like SENSEX or NIFTY to choose sectors, stocks, and diversify portfolios. It is of 2 types- replication basis, which is based on underlying assets’weightage, and sampling, which is based on various risk and return approaches.
  • Discretionary Portfolio Management: This type lets the manager make investment decisions, including buying and selling, according to his evaluations instead of the client.
  • Non-Discretionary Portfolio Management: In this, the manager serves as a financial advisor,whereas the final decision is of the client. The role of a manager is limited to providing suggestions.

Let us now see the guidelines for each type.

How to choose the right one?

If you are confused about which one’s for you, you can use the following points to decide.

  • If you are a high-risk taker and want high capital gains, you should go for active management. However, it has high fund manager fees, any error can significantly impact your investments, and there is a high risk when the market is regular.
  • If you are a long-term to-go person, you can go for passive management. However, there is high security in a single place and risks.
  • Suppose you are knowledgeable and want no stress for investments; you can let experts handle it by choosing discretionarymanagement. It is even simpler if you and your manager’s suggestions are alike. The only thing to consider is its high service commission.
  • If you want complete control over investments and looking for only advice, you can go for non-discretionary management. However, your wrong decisions might suffer.

Thus, you can now evaluate and choose the right fit.

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