Short answer: A portfolio management service (PMS) is an investment service registered with the Securities and Exchange Board of India (SEBI), in which a portfolio manager runs, or advises on, a separate portfolio of securities for each client. Unlike a mutual fund, a PMS does not pool your money into units; the securities are held directly in your own name, and the manager tailors them to your goals, risk appetite and time horizon.
Last reviewed: 13 November 2026
At a glance
The table below summarises the key terms and the three types of PMS. The types differ mainly in how much control you keep over decisions.
| Term | What it means | Key point |
|---|---|---|
| PMS | SEBI-registered service that manages a separate portfolio for each client | Tailored to each client, not pooled |
| Direct ownership | Securities are held in the investor’s own name | Investor owns each individual holding |
| Discretionary PMS | Manager decides and trades without prior approval | Investor keeps the least control |
| Non-discretionary PMS | Manager recommends; trades happen only after investor approves | Investor approves each trade |
| Advisory PMS | Manager gives guidance and analysis only | Investor makes every decision and trade |
| Liquidity | How easily you can exit your holdings | PMS is less liquid than open-ended mutual funds |
How is a PMS different from a mutual fund?
In a mutual fund, many investors’ money is combined into a common pool, and you hold units of that pool. In a PMS, there is no pool. Your portfolio is built only for you, and you own each security directly.
This difference affects three things: who owns the holdings, how taxes are calculated, and who can see what the portfolio contains. Each of these is covered below.
What are the three types of PMS?
A PMS comes in three types: discretionary, non-discretionary and advisory. They differ in how much control the investor keeps.
In a discretionary PMS, the portfolio manager makes investment decisions and executes trades without seeking your prior approval. This gives the manager the most freedom, and you give up the most control.
In a non-discretionary PMS, the manager recommends investments, but trades are executed only after you approve them. In an advisory PMS, the manager only gives guidance and analysis. You make every decision and carry out all trades yourself.
How is a PMS taxed?
Because the holdings sit in your own account, you are taxed directly on gains from each sale. The tax depends on the asset type and how long you held the security.
Taxes arise at the point of sale, not because of a pooled fund’s internal activity. Each sale you or your manager makes can create a taxable gain or loss that you must account for.
Here is a hypothetical example, with invented figures for illustration only. Suppose an investor, Asha, has ₹10 lakh of shares in her PMS account, bought over time. If the manager sells some of those shares for ₹12 lakh in total, the gain on that sale is ₹2 lakh. Asha is taxed on that ₹2 lakh gain directly, at the rate that applies to that asset type and holding period.
Who can see the holdings?
PMS holdings are disclosed to the client only. Mutual fund portfolio data, by contrast, is publicly available.
This is a catch worth understanding. With a mutual fund, anyone can look up what the fund holds. With a PMS, only you see your own portfolio, so outside observers cannot check it independently.
How easily can you exit a PMS?
A PMS is less liquid than open-ended mutual funds. Liquidity means how quickly and cheaply you can turn your holdings back into cash.
Exiting a PMS may require unwinding the underlying stocks, which means selling each one. This process can involve charges. An open-ended mutual fund does not require you to sell individual stocks in the same way, so exit is generally simpler there.
Frequently asked questions
Is my money pooled with other investors in a PMS?
No. In a PMS you directly own the individual securities, and they are held in your own name, unlike mutual fund units that represent a share of a pool.
Can the manager buy and sell without asking me?
It depends on the type of PMS. In a discretionary PMS, the manager trades without prior approval. In a non-discretionary PMS, trades happen only after you approve them, and in an advisory PMS, you make every decision and carry out all trades.
Can I see what a PMS holds, as I can with a mutual fund?
Not in the same way. PMS holdings are disclosed to the client only, whereas mutual fund portfolio data is publicly available.
Is a PMS easy to exit?
It is less liquid than open-ended mutual funds. Exiting may require unwinding the underlying stocks, and it can involve charges.
Sources and last check
Facts in this article were checked against the sources below on 13 November 2026. Rules and figures can change; check the primary source before acting.
- groww.in (broker education)
- kotakneo.com (broker education)
- upstox.com (broker education)
- 5paisa.com (broker education)
This article is general information, not investment advice. MyFinanceBandhu is not a SEBI-registered investment adviser.