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FAQs

What is Portfolio Management Service (PMS)?

PMS would invest on behalf of its clients in their separately managed accounts in various securities including listed equities, unlisted equities, fixed income instruments, hybrid or structured products etc.

Investment solutions in a PMS can be provided in three ways – Discretionary Portfolio Management, Non-Discretionary Portfolio Management, and Advisory Portfolio.

  • Discretionary: Under these services, the choice, as well as the timings of the investment decisions, rest solely with the Portfolio Manager.
  • Non-Discretionary: Under these services, the portfolio manager will execute trades based on the client’s investment decision.
  • Advisory: Under these services, the portfolio manager only suggests investment ideas. The choice, as well as the execution of the investment decisions, rest solely with the Investor.

PMS firms will have a team of professional portfolio manager(s) and analysts who are specialised in one or more asset classes and investment strategies. The PMS team is responsible for selecting and continuously tracking investments in various asset classes as per the mandate and strategy to optimise returns. The funds can potentially be tailored in accordance with the client’s financial objective, constraints, risk capacity, tax liability incidence, and other factors.

Who can offer Portfolio Management Services in India?

Portfolio Management Services can be offered only by SEBI registered Portfolio Managers.

Who is an ideal PMS investor?

The specialised investment solutions provided by Portfolio Managers typically cater to high net-worth clients. These clients can be individuals or Institutional entities who require a dedicated investment management service.

The PMS platform is ideal for investors who:

  • Seek to invest in asset classes like equity, fixed income, structured products etc.
  • Value a highly personalised investment management solution.
  • Are discerning and appreciate a high level of client service.
  • Require investment advice for long-term wealth creation.

Where can an investor look out for information on portfolio managers?

Investors can log on to the website of SEBI www.sebi.gov.in for information on SEBI regulations and circulars pertaining to portfolio managers. Addresses of the registered portfolio managers are also available on the SEBI website. Information on monthly reports submitted by Portfolio Managers to SEBI can be accessed at https://www.sebi.gov.in/sebiweb/other/OtherAction.do?doPmr=yes

What is the disclosure mechanism of the portfolio managers to their clients?

The portfolio manager provides to the client the Disclosure Document prior to entering into an agreement with the client. It is also made available on our website for anytime access. The Disclosure Document contains the quantum and manner of payment of fees payable by the client for each activity, portfolio risks, complete disclosures in respect of transactions with related parties, the performance of the portfolio manager and the audited financial statements of the portfolio manager for the immediately preceding three years.

What is the minimum or maximum investment in Unifi's Portfolio Management Service?

  • As per SEBI norms, the minimum investment in a PMS scheme is now Rs. 50 Lakhs for fresh investments. Additional investments can be minimum of Rs. 10 Lakhs or above for existing clients.
  • At Unifi, there is no maximum investment limit into a portfolio account. We cater to clients of varying portfolio sizes, and our Relationship Managers are equipped to manage individual accounts of a sizeable asset under management (AUM).

How is PMS different from Mutual Funds?

Features Portfolio Management Service Mutual Funds
Structure
  • Complete ownership of all assets remains with the investor. An exclusive demat account is opened in the investor’s name.
  • The Portfolio Manager administers this arrangement on behalf of the investor to implement the investment strategy and allocation the investor has opted for.
  • Each mutual fund scheme will have a pool account in which hundreds of thousands of investors pool together their assets.
  • Investment value is based on Net Asset Value (NAV) published by the mutual fund.
Investment Style
  • Each investment strategy is very niche and can be implemented preferably across a smaller asset base.
  • Investment styles can be launched quickly and as soon as the market provides an opportunity - since regulatory clearance is not necessary.
  • Once the market opportunity recedes, the investment strategy can be wound up and look for alternate choices.
  • A typical mutual fund will target a higher asset base, and hence the styles they choose will reflect the same.
  • A MF will have to undergo a lengthy regulatory approval process before launching a new style.
  • Invariably, the style will be continued even after the market opportunity no longer exists.
Investor Service
  • Every investor is assigned a Relationship Manager (RM) who is trained to assist the investor in making investment choices depending on risk tolerance and return expectations.
  • Every investor also gains access to a senior RM with a minimum market experience of 20 years who assumes overall responsibility and accountability of the relationship.
  • MFs are primarily sold through distributors, and hence the distributor’s RM transact with the investor.
  • It is operationally unfeasible to assign a senior RM to every investor.
Investor Interface during market volatility
  • At the time of sign-up, each investor is provided clarity on accessibility to Relationship Managers and the investment management team.
  • While a performance review is done each quarter, during phases of market volatility, an investor can speak with the team to assess the need for action, if any.
  • Since MFs are distributed through distributors, “handholding” at times of market volatility and distress rests with the distributor, who is not part of the investment management function and may not be equipped to offer expert advice.
Size
  • As per SEBI regulations, the minimum investment in a Portfolio Management Service is Rs. 50 Lakhs.
  • Each portfolio manager is allowed to specify their minimum size above the mandatory limit.
  • The minimum investment in a mutual fund scheme is usually Rs.5000.
Average Client Investment
  • Portfolio Managers cater to a sophisticated investor base - a typical manager will have a few hundred relationships.
  • Smaller numbers of significantly sized relationships allow the Portfolio Manager to maintain high service standards.
  • Mutual Funds are designed as mass-market products where each fund house will have millions of investors with an average of less than Rs.50,000 per client.
Disclosure
  • Daily disclosure of portfolio holdings on the same day.
  • Detailed monthly reports along with market commentary from the investment management team.
  • Quarterly review by experienced relationship managers and an update on each of the portfolio holdings.
  • Only NAV is disclosed on a daily basis.
  • Individual holdings without cost details are disclosed only once a month along with a fund manager commentary.
  • No stock report on each of the holdings in the fund.
Cost
  • Unifi’s cost structure for its PMS relationships will either be a flat management fee as agreed by the client and/or a performance incentive (charged only when investor return exceeds a predetermined rate).
  • Unifi does not charge any entry or exit fees to its investors, irrespective of size and tenure.
  • The cost of a MF subscription tends to be high, typically around 2.5% expense ratio irrespective of return to the investor.
  • In addition, the investor will charge varying loads depending on size and tenures.
Liquidity
  • The client will receive redemptions within 3 working days from the requested date, either through cash or securities or part thereof based on the investor’s choice.
  • Redemption requests can even be made via email quoting the client’s registration ID.
  • Within 3 working days from the redemption date, but only by cash.
  • Redemption shall be made only through the form submitted to the registrar.
Regulation
  • Regulated by SEBI (Portfolio Manager) Regulations 1993.
  • Regulated by SEBI (Mutual Funds) Regulations 1996.

What returns can I expect from a Portfolio Manager?

As per the Portfolio Management Regulations prescribed by SEBI, we cannot guarantee a specific rate of return. However, the investment objective of any Portfolio Manager is to outperform the benchmark indices.

As an investor, what is the expected time horizon I need to bear in mind?

The ideal time horizon for an event arbitrage/high yield strategy is between 12 - 18 months and 48 - 60 months for pure equity strategies.

How often can I view my NAV, positions and transactions undertaken in my account?

Unifi provides each client with secure account login and password that can be used to access a comprehensive portfolio summary on a daily basis. In addition to the online record of transactions, Unifi also provides its clients a monthly portfolio statement.

What kind of reports can the client expect from the Unifi?

In addition to the online record of transactions, Unifi also provides its clients with a quarterly statement of their portfolio containing the following details, namely:

  • Portfolio Holding as on report date.
  • Transactions report for the selected period.
  • Beneficial interest received during the selected period.
  • Expenses incurred in the portfolio of the client during the selected period.
  • Details of risk foreseen by the portfolio manager and the risk relating to the securities recommended by the portfolio manager for investment or disinvestment.
  • Default in payment of coupons or any other default in payments in the underlying debt security and downgrading to default rating by the rating agencies, if any.
  • Details of commission paid to the distributor(s) for the client.

Does the Portfolio Management scheme have any lock-in period?

Unifi’s Portfolio Management platform ensures that there is absolutely no lock-in of a client’s funds. A client is free to redeem or add-in part or whole from/to his account with Unifi.

What is my tax liability under the Portfolio Management scheme?

The tax liability of a PMS investor is the same as that of an investor who accessed the capital markets by himself. Under the PMS scheme, each transaction will be considered as an independent trade, and capital gains will be applied to each transaction depending on the holding period of the stock.

At present, the long-term capital gain tax is 11.96%, while the short-term capital gain tax is 17.94%.

How do I introduce my initial corpus?

The initial corpus into Unifi’s Portfolio Management scheme can be either in the form of cash funded into an account opened in the client’s name with a designated bank or the form of securities/shares.

What are the documents required for opening a PMS account?

THE DOCUMENTS REQUIRED TO ENABLE YOUR PORTFOLIO MANAGEMENT ACCOUNT AT UNIFI ARE:

  • Account Opening Form
  • Address Proof
  • Identity Proof
  • PAN Card Copy
  • Bank Account Opening Form
  • Relevant KYC Forms prescribed by the regulator

What are the rules that govern the services of Unifi?

The services provided by Unifi are governed by the agreement between Unifi and the investor. The agreement covers the details as specified in the SEBI Portfolio Manager Regulations. However, additional requirements can be specified by the Portfolio Manager in the agreement with the client. An investor is advised to read the agreement carefully before signing it.

What is the fee structure under the PMS scheme?

UNIFI’S PMS COMPENSATION IS BASED ON TWO OPTIONS THAT A CLIENT MAY CHOOSE FROM:

  • A flat management fee as agreed by the client will be charged proportionately on a monthly basis on the funds managed, (Or)
  • A performance-based fee, computed as per a pre-agreed proportion of the profit earned over and above a predetermined threshold return.

What is the meaning of 'High Water Mark'?

Calculation of performance fee is done considering the high watermark principle.

'High Water Mark' is the higher of either 'corpus investment value' or 'highest portfolio value at which fees has been paid historically'.

Illustration of how the High-Water Mark would work: A client's initial contribution is Rs 1,00,00,000, which rises to Rs 1,25,00,000 in its first year. Therefore, a performance fee would be payable on the Rs 25,00,000 return. Next year, the portfolio value drops to Rs 110,00,000. Therefore, no performance fee is payable. In the third year, the portfolio value rises to Rs 1,40,00,000. A performance fee is payable only on the profit over the previously achieved high watermark, i.e., Rs 1,25,00,000 less performance fee (including taxes).

Can I withdraw my profit at any time?

Clients can withdraw their profits at any time, provided they maintain the prescribed Rs. 50 Lakh minimum limit for PMS investors.

Where will you invest my money?

When you open an account with Unifi, you are required to allocate your investment to one or more of Unifi’s products.

We will invest your capital in accordance with the respective products’ investment and risk framework.

Can NRIs avail of the Portfolio Management Services?

The PMS platform permits investments by all Indian nationals, resident or otherwise. In order to invest through the PMS scheme, NRIs will have to open a PIS account.

What is PIS?

To invest in the Secondary markets in India, NRIs need to obtain permission from the Reserve Bank of India (RBI). In order to do so, a designated bank account has to be opened under the Portfolio Investment Scheme (PIS), and all transactions related to the investment in the secondary markets need to be routed through this account.

Who do I call in case of any queries on my PMS portfolio?

  • If a client has been introduced by a wealth manager or RIA, he would typically call his RM in the introducing firm and reach out to Unifi as a second step if he requires further assistance.
  • Unifi provides its clients unrestricted and continuous access to its Relationship Managers who interact with clients on a regular basis for day-to-day requirements.
  • However, in case of any specific requirements that arise, contact details of senior management at Unifi, including the Chief Investment Officer, are made available in the welcome letter sent to clients.
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