How Portfolio Management Services make money?

1.Of course the first one is - They make money upon selling their clients’ holdings (on their behalf) followed by retaining a percentage of the profit.

  1. What about the dividends received by the clients? Do they keep a part of that too?

3… What are their other sources of income ?

Anyone know about the finest details about the complete list of their sources of income?

1 Like

Check this Disclosure document from Principal India. Most of the PMS businesses will have a document like this. Check page 14.

(a) Fixed Investment Management Fee:
Investment Management Fee of upto 3.50% p.a. would be charged on the daily average portfolio value.
(b) Performance Linked Management Fee:
Performance linked fee of upto 50% on the returns generated by the Portfolio Manager beyond a defined
threshold return as mutually agreed with the client based on the high water mark principle.
© Fixed Cum Performance Linked Management Fee:
Fixed Management Fee of upto 3.00 % p.a. payable on the daily average portfolio value and return based
fee of upto 50% on the incremental returns generated by the Portfolio Manager beyond a defined threshold
(d) Brokerage and transaction cost:
Brokerage and other transaction costs on trades would normally be capitalized in the books of the client,
and the same may be upto 1% of the value of the transaction.
(e) Other Charges
Service Tax and/or any other charges/taxes as may be applicable will be payable by the client. Service Tax
chargeable is 14% plus applicable surcharge and cesses.
(f) Custodian Fee
The fees payable to the custodians are based on the total equity Assets under management across all
discretionary clients, and the same are borne by the Portfolio manager.
(g) Mode and frequency of payment of the above fees/expenses/charges
Above fees/charges will be charged on daily average portfolio value, wherever applicable, and will be
payable on a monthly/quarterly basis or as per the terms agreed with the investor. The investor will have
the choice of paying the amount by way of a cheque or authorize the Portfolio Manager to recover the
amount from the investor’s bank account at the end of each month/agreed period. For the purpose of
recovering the fees, the Portfolio Manager will have discretion to sell securities held in the portfolio, if
there is insufficient balance in the bank account.


I tried to give multiple likes …but that feature is not available…

1 Like