Investment process

A PMS investment process starts with the mandate (defined in the agreement: e.g., "growth equity, market-cap agnostic, ex-financials"). IPS captures client-specific overlay. Allocation, security selection, and ongoing review follow. The PM has discretion within the mandate; deviation requires client consent.

Mandate types: Long-only equity, multi-asset, dynamic asset allocation, sector-specific, factor-based. Security selection: fundamental analysis (DCF, multiples, qualitative), quantitative (factor screens), or blended. Most Indian PMS funds run concentrated portfolios (15-30 stocks) — distinct from mutual funds (often 50-100+). Concentration creates higher tracking error and potentially higher returns, but also higher idiosyncratic risk. Review: monthly internal, quarterly client, with rebalancing decisions documented.

A practitioner-grade insight: concentrated portfolios (PMS) require disciplined position sizing and conviction-based allocation. The PM must be willing to be wrong on individual names without panic-selling, and willing to trim winners that have grown disproportionate. Most PMS performance dispersion comes from this discipline (or lack of it), not from stock-picking skill. Clients should ask managers about their position-sizing framework and turnover ratios — high turnover usually destroys returns through tax drag.