Shriram PMS
Smart investing with Quantamental Strategies

As defined in the Regulation 2(o) of SEBI(Portfolio Managers)Regulations, 2020, a portfolio manager is a body corporate, which, pursuant to a contract with a client, advises or directs or undertakes on behalf of the client (whether as a discretionary portfolio manager or otherwise) the management or administration of a portfolio of securities or goods or funds of the client.

PMS are of three types - Discretionary, Non-Discretionary, and Advisory.

A Discretionary Portfolio Management Service (DPMS) is a specialized investment service for high-net-worth individuals (HNIs), where the investor entrusts the management of their funds to a professional Portfolio Manager. In this arrangement, the Portfolio Manager is given the authority to make independent investment decisions on behalf of the client.

Under these services, the choice as well as the timings of the investment decisions rest solely with the Portfolio Manager.

A Non-Discretionary Portfolio Management Service (NDPMS) is a professional investment service where the Portfolio Manager acts purely in an advisory and execution capacity. Unlike a discretionary account, the manager does not have the authority to make investment decisions on behalf of the client.

Under these services, the portfolio manager only suggests the investment ideas. The choice as well as the timings of the investment decisions rest solely with the Investor. However, the execution of trade is done by the portfolio manager.

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.

High Net-worth Individuals and Non-Individuals such as HUFs, Partnerships Firms, Trusts, Sole Proprietorship Firms and Body Corporates.

The Investment solutions provided by PMS cater to a niche segment of clients. The clients can be individuals or institutional entities with high net worth.

The offerings are usually ideal for investors who are looking to invest in asset classes like equity, fixed income, structured products, etc., who desire personalised investment solutions, and who desire to create long-term wealth.

The portfolio manager is required to accept minimum funds of INR 50 Lacs or securities or any combination of funds and securities having a minimum combined value of INR 50 Lacs from the client.

The investor must satisfy the mandatory KYC requirements as prescribed under laws by providing documents like an Identity Proof, PAN card, Address Proof, etc. Investors are required to sign the Application Form along with an Agreement (which will detail the amount the investor is committing to invest, management fees, and profit sharing of success-based fee amongst other things), and risk disclosures. The details of KYC documents required by each category of investors, i.e. Individual, HUFs, Corporate, etc., are mentioned in the Application Form. Investor onboarding will be done after running internal Anti-Money Laundering Checks as applicable.

Disclosure document is the mandatory document that the Portfolio Manager has to provide to the client at the time of or any time prior to entering into an agreement to provide Portfolio Management Services.

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.

No. SEBI also does not certify the accuracy or adequacy of the contents of the disclosure document.

The disclosure document is made available on the website of the Portfolio Manager click here.

According to the SEBI (Portfolio Managers) Regulations, 2020, the portfolio manager must charge a fee for portfolio management services based on the agreement with the customer. The cost may be management fees, a performance-based fee, or a combination of the two.

The agreement between the portfolio manager and the client must specify, among other things, the amount and manner of fees due by the client for each activity for which the portfolio manager provides services directly or indirectly.

Under Discretionary Portfolio Management Service (DPMS), Portfolio Managers shall invest funds of his clients in the securities listed or traded on a recognized stock exchange, money market instruments, units of Mutual Funds through direct plan, and other securities as specified by the Board from time to time.

Under Non-Discretionary Portfolio Management Service (NDPMS), Portfolio Managers may invest up to 25% of the AUM of a client in unlisted securities, in addition to the securities permitted for discretionary portfolio management.

The portfolio manager shall furnish periodically a report to the client, as per the agreement, but not exceeding a period of three months or as and when required by the client and such report shall contain the following details, namely: -

• the composition and the value of the portfolio, description of securities and goods, number of securities, value of each security held in the portfolio, units of goods, value of goods, cash balance and aggregate value of the portfolio as on the date of report;
• transactions undertaken during the period of report including date of transaction and details of purchases and sales;
• beneficial interest received during that period in the form of interest, dividend, bonus shares, rights shares, etc;
• expenses incurred in managing the portfolio of the client;
• 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 distributor(s) for the particular client.
• the portfolio accounts of the portfolio manager shall be audited annually by an independent chartered accountant and a copy of the certificate issued by the chartered accountant shall be given to the client.
• the client may appoint a chartered accountant to audit the books and accounts of the portfolio manager relating to his transactions and the portfolio manager shall co-operate with such chartered accountant in course of the audit.