Portfolio Management Services: Different Types and Benefits Explained
Have you heard of PMS or Portfolio Management Services? This is very common for people who are into businesses. Basically, this is a systematized approach to minimize risks while maximizing returns of investments. This allows you to come up with a sound final decision without worrying. This is because you have a team of researchers, stock market experts, and portfolio managers. Furthermore, PMS encourages better preparation for possible market misfortunes.
PMS has four common types.
1. The Active Portfolio Management- In this type, the goal of the portfolio manager is maximizing returns. Managers minimize the risks of your investments. This is done through diversifying them over businesses, industries, and asset classes. The result in this type is high.
2. The Passive Portfolio Management- In this type, the manager focuses on the fixed profiles that goes with the market trend. This is why portfolio managers go for investing in index funds that grow passively in the process of time without much intervention. While this type is known to have low turnover, it has good long-term outcome.
3. The Discretionary Portfolio Management- In this type, the portfolio manager manages a particular portfolio. He or she picks the most suitable strategy after looking into your objectives, investment duration, and risk tolerance. A debt-oriented funds, for instance, is recommended to those who are a risk-averse investor. On the other hand, the portfolio managers will tell risk-taking investor to go for equity-oriented funds.
4. The Non-Discretionary Portfolio Management- In this type, portfolio managers will recommend you to invest. But, the final choice is always yours. When you finally have decided to go for it, the managers will be the one to take care of the entire process for you.
Now that you already know the different types of portfolio management services, let’s talk about its benefits.
* You get an expert opinion. One of the best things when you use PMS is the fact that you’ll be able to get professional advices with regards to your investments. Since they are experts at it, you are confident that what they tell you is a good deal. As a result, you will most likely enjoy an increased profit margin.
* You enjoy a customized investment plan. Another benefit that you’ll enjoy with PMS is that professionals can customize an investment strategy according to your financial objectives. They can even modify the strategies based on your budget, income, age, and risk tolerance.
* You can expect an efficient risk management. One of the major goals of PMS is to increase your return and decrease the possible risks. That is why they diversify the involved risks to keep you from huge losses in case the market trends change.
* You have a regular monitoring. When you have a portfolio manager, he is going to work closely on your assets’ performances. He makes sure that the returns are regularly generated. Upon analyzing your returns, there is a need to alter your investments in order to meet the financial objectives.
So, these are the different things that you need to know about Portfolio Management Services.