When considering investment in portfolio management services in India, it’s crucial to understand the portfolio management services charges involved. These charges can significantly impact the net returns on your investment.

Types of Portfolio Management Service Charges

The fee structure generally comprises three types of charges: Management Fees, which are the annual fees for managing your portfolio; Performance Fees, often levied when the portfolio outperforms a specified benchmark; and Entry or Exit Load, which are one-time fees charged either when you invest or withdraw from the portfolio.

  1. Management Fees: Management fees are the annual charges that investors pay for the professional management of their investment portfolios. These fees are essential for compensating the portfolio managers for their expertise, research, time, and the resources they invest in monitoring and adjusting the portfolio to align with the investor’s objectives and market conditions.
  2. Performance Fees: Performance fees come into play when the portfolio’s returns exceed a predetermined benchmark or target. The rationale behind these fees is to align the interests of the portfolio manager with those of the If the portfolio performs exceptionally well, surpassing the set benchmark, the manager is rewarded with a performance fee, emphasising their incentive to achieve superior returns.
  3. Entry or Exit Load: Entry and exit loads are one-time fees that investors encounter either at the beginning or the end of their investment tenure. An entry load is charged when an investor initially invests in the portfolio, covering costs related to onboarding, administrative processes, and initial setup. Conversely, an exit load is levied when investors decide to withdraw their funds before a specified period. This fee acts as a deterrent for premature withdrawals, ensuring that investors remain committed to their investments for a predetermined

Many portfolio management companies in India offer a variety of fee structures tailored to the services provided and the complexity of the portfolio. Usually, the charges vary from company to company and also depend on the type of portfolio management service chosen. Some PMS services in India may offer a competitive fee structure for large portfolio sizes, while others may provide additional services like tax consultancy included in their fee. Before choosing a portfolio management service, it’s crucial to compare their charges and see how they align with the portfolio’s performance. That way, investors can find the best PMS funds in India that not only offer optimal returns but also provide value for the fees charged. Understanding the portfolio management services charges can help you make an informed decision and manage your investments effectively. You must look at the return on your investment, evaluating the fees charged whether it justifies the returns generated.

Aequitas’ charges a 2% fixed management fees and 10% performance fees based on high water mark.