There are typically 4 types of portfolio management services available, which includes Active, Passive, Discretionary and Non-discretionary portfolio management services:

Active Portfolio Management: Central to this type of portfolio management is the ambition to generate returns that outpace market averages. Active managers are keen on buying stocks when they’re undervalued and selling them once their value rises above the average. The role of the portfolio manager is crucial here, as they consistently survey the stock market to unearth the most promising investment opportunities. While this approach can yield substantial returns, it’s also fraught with high risks. It’s an apt choice for those with a penchant for risk and an eye on significant returns.

Passive Portfolio Management: This strategy stands in contrast to active management. Advocates of this approach are firm believers in the efficient market hypothesis, asserting that a company’s inherent value is always mirrored in its stock price. Passive managers predominantly opt for index funds, known for their minimal turnover and enduring value. This portfolio management style promises consistent, long-term rewards at a diminished cost, making it a go-to for novices or those in pursuit of steady growth.

Discretionary Portfolio Management: Here, investors hand over the reins of their investments to a broker or manager. After furnishing the initial funds and delineating their financial objectives, the rest is managed by the portfolio manager, from cherry-picking stocks to finalising trades. This service is tailor-made for those who, either due to time constraints or a lack of expertise, prefer not to be actively involved in their portfolio’s day-to-day management.

Non-Discretionary Portfolio Management: This portfolio management style is more of a partnership. While the manager offers insights based on prevailing market conditions and the investor’s aspirations, the ultimate investment decision is the investor’s prerogative. It’s an ideal pick for those keen on retaining a say in their investments while also tapping into professional advice.

Aequitas offers Discretionary Portfolio Management service.