Dilzer Consultants - Investments and Financial Planning

An ISO 9001 (2008) Certified Company

   SEBI REGISTERED INVESTMENT ADVISOR

Portfolio Management Service

Portfolio Management is the art of selecting the right investment policy for the individuals in terms of minimum risk and maximum return.

In other words, Portfolio management refers to managing an individual’s investments in the form of bonds, shares, cash, mutual funds  so that an investor earns the maximum profits within the stipulated time frame as per his risk appetite, under the expert guidance of portfolio managers.

Need for Portfolio Management

Portfolio management presents the best investment plan to the individuals as per their income, budget, age and ability to undertake risks.

It minimizes the risks involved in investing and also increases the chance of making profits.

Portfolio managers understand the client’s financial needs and suggest the best and unique investment policy for them with minimum risks involved.

Portfolio management enables the portfolio managers to provide customized investment solutions to clients as per their needs and requirements.

 

Types of Portfolio Management

Portfolio Management is further of the following types:

  • Active Portfolio Management: As the name suggests, in an active portfolio management service, the portfolio managers are actively involved in buying and selling of securities to ensure maximum profits to individuals.
  • Passive Portfolio Management: In a passive portfolio management, the portfolio manager deals with a fixed portfolio designed to match the current market scenario.
  • Discretionary Portfolio management services: In Discretionary portfolio management services, an individual authorizes a portfolio manager to take care of his financial needs on his behalf. The individual issues money to the portfolio manager who in turn takes care of all his investment needs, paper work, documentation, filing and so on. In discretionary portfolio management, the portfolio manager has full rights to take decisions on his client’s behalf.
  • Non-Discretionary Portfolio management services: In non discretionary portfolio management services, the portfolio manager can merely advise the client what is good and bad for him but the client reserves full right to take his own decisions.

How it works?

The investor and the portfolio manager enter into an agreement detailing the investment strategy, type of management, active, passive, type of profit sharing, fee only or profit sharinng  and other details. The investor can offer either a sum of up toRs 25 lakh or stocks worth this much. PMS are offered on discretionary as well as non-discretionary basis. In the former, the manager takes investment decisions and has the power of attorney to manage the investor’s demat account. In nondiscretionary, he merely suggests investment ideas; the rest is the investor’s prerogative.

FEE STRUCTURE
The fees associated with PMS, is the entry load which ranges from 1-3.5%, Fund management fee which ranges from 2.50-2.75%, exit load, custodian fee of 0.30-0.50%

MODEL PORTFOLIO
While many PMS providers offer standardised portfolios, some offer investments tailored to clients’ goals. For instance, a client may want to invest a large amount in a single stock. This is not possible in mutual funds, as they cannot hold more than 10% net asset value in a single stock.

 

Motilal Oswal Portfolio Management Service. Value Strategy Objective: The Strategy aims to benefit from the long term compounding effect on investments done in good businesses, run by great business managers for superior wealth creation.   Value Investment Philosophy:

  • Focus on Return on Net Worth : Companies which are likely to earn 20-25 % on its net worth going forward.
  • Margin of safety : To purchase a piece of great business at a fraction of its true value.
  • Balance between growth and value :
    • The focus is on buying undervalued companies
    • Buying stable earnings / cash flows in reasonably priced assets
  • Long-term investment View : Strongly believe that “Money is made by investing for the long term”
  • Bottom Up Approach : To identify potential long-term wealth creators by focusing on individual companies and their management bandwidth.
  • Focused Strategy Construct : The strategy should not consist of more than 15-20 stocks

 

NTDOP Strategy Objective: The Strategy aims to deliver superior returns by investing in stocks from sectors that can benefit from the Next Trillion Dollar GDP growth It aims to predominantly invest in Small and Mid Cap stocks with a focus on identifying potential winners that would participate in successive phases of GDP growth.   New Trillion Dollar Opportunity (NTDOP) Investment Philosophy:

  • High Growth Stories : Sectors and companies for higher than average growth.
  • Reasonable Valuation : Invest in high growth companies at reasonable price / value.
  • Emerging Themes : Focus on Identifying Emerging Stocks / Sectors.
  • Buy and Hold Strategy : The Portfolio shall focus on above philosophies and hold positions till value crystallization.

 For more information, do contact us.