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A portfolio manager is an individual who is professionally qualified and authorized by the Securities and Exchange Board of India (SEBI) to manage investments for clients which may be individuals or business entities. To become a portfolio manager in India, a PMS license from SEBI is required.
If you’re interested in becoming a portfolio manager, you must learn about their role. Going through this article will allow you to understand the role of a portfolio manager easily.
The Securities and Exchange Board of India (SEBI) defines a portfolio manager as, “a body corporate who, pursuant to a contract or arrangement with a client, advises or directs or undertakes on behalf of the client (whether as a discretionary portfolio manager or otherwise), the management or administration of a portfolio of securities or the funds of the client.”
The regulations that govern portfolio managers in India are called the Securities and Exchange Board of India (Portfolio Managers) Regulations, 1993. These regulations contain chapters on the registration of portfolio managers, capital adequacy requirement, code of conduct, contract with clients and disclosures, maintenance of books of accounts and records, submission of half-yearly results, accounts and audit, reports to be furnished to the client and general responsibilities of a portfolio manager.
Portfolio managers generally provide a variety of services to their clients, such as:
Active portfolio management services
Passive portfolio management services
Liquidity
Portfolio Diversification
Asset allocation
Discretionary portfolio management services
Capital appreciation.
Risk Mitigation
The role of a portfolio manager can be understood through the following points:
A portfolio manager helps the clients to decide the best investment plan based on their income, age and risk tolerance.
An unbiased nature and thorough professionalism must be maintained by portfolio managers. They must not always act desperate for commissions. It is their responsibility to guide their clients correctly and help them choose the investment plans best for them.
A portfolio manager must deal with their clients with patience and if needed, they must meet their clients more than once to ensure they have understood all the investment plans, maturity period, terms and conditions, benefits, risks associated with plans, etc.
They must analyze the background of their clients and learn about their capacity.
All the latest changes happening in the financial market must be known by the portfolio managers. Accordingly, they must suggest their clients the best plans with minimum risks involved and aim for maximum portfolio returns.
A portfolio manager needs to be a great decision maker and be prompt enough to finalize the best investment plan for clients, so they can invest on their behalf.
A portfolio manager is responsible for informing individuals about various investment tools available in the market and benefits of each plan.
Portfolio managers design customized investment solutions to meet unique needs of each client since no two individuals have the same financial objectives.
Another role of a portfolio manager is to maintain transparency with individuals. They must read out the terms and conditions, and not hide anything from their clients that might cloud their judgment. Honesty is the key to maintaining a long term relationship with clients.
Ideally, an individual who should become a portfolio manager must be someone who is passionate about financial markets, and possesses strong analytical and decision-making skills. Additionally, they must adhere to high ethical standards.
Many individuals go into investment decision-making roles after working as analysts for several years. If you are someone who likes coming up with investment ideas, developing and implementing investment strategies, are able to mitigate risks, and can remain decisive and resilient when dealing with poorly performing financial markets, the role of a portfolio manager could be appropriate for you.
Many institutions hire portfolio managers such as:
Banks
Hedge Funds
Private Equity
Sovereign Wealth Funds
Insurance Companies
Pension Funds
Wealth Management Firms
Endowments
Portfolio managers are involved in making decisions related to investments on behalf of their clients. To meet the financial goals of their clients, they create and implement various investment strategies and tools. They are tasked with constructing and managing portfolios, and making decisions regarding the investments to buy and the right time to sell them.
Want to obtain a PMS license from SEBI to become a portfolio manager in India? Connect with Registrationwala’s PMS consultants.
Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.
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