What is the minimum investment required for Large Cap PMS in India?

SEBI mandates a minimum of ₹50 lakh for all Portfolio Management Services, raised from ₹25 lakh in January 2020. But having ₹50 lakh does not make PMS right for you. Experts suggest allocating only 10-20% of your total equity to PMS, which implies ideally having ₹2.5-5 crore in total equity before considering it. Your portfolio value must also stay above ₹50 lakh for voluntary withdrawals.

How is Large Cap PMS taxed in India?

Because you own the shares directly in your demat account, gains are taxed in your hands. Short-term capital gains (held 12 months or less) are taxed at 20%, and long-term gains (over 12 months) at 12.5% above a ₹1.25 lakh annual exemption, per Finance Act 2024 rates effective 23 July 2024. Dividends are taxed at your slab rate. Crucially, you owe tax each time the manager books a gain, even if you withdraw nothing.

Is Large Cap PMS better than a large cap mutual fund?

For most investors with ₹50 lakh to ₹2 crore in equity, large cap mutual or index funds offer better value. Their expense ratios are 0.1-2.0% versus 1-3%+ for PMS, and mutual funds defer capital gains tax until you redeem, while PMS taxes every booked gain along the way. PMS makes more sense at ₹5 crore-plus, where customisation, direct ownership, and integration with existing holdings justify the higher cost.

What fees does a Large Cap PMS charge?

There are three models: fixed-only (0.25-2.5% of portfolio value annually), performance-only (10-20% of profits above a hurdle rate of roughly 8% or the index return, usually with a high-water mark), and hybrid (a lower fixed fee plus a performance fee, the most common structure). On top of fees, expect brokerage, Securities Transaction Tax at 0.1%, custody, demat and audit charges, and 18% GST on fees, adding another 0.3-0.7% and pushing total cost to 1-3%+ annually.

What happens to my PMS if the provider shuts down?

Because the securities sit in your own demat account with an independent custodian, they remain yours if the PMS provider closes. SEBI requires this separation precisely to protect investors. Practically, the portfolio simply stops being actively managed, so you would appoint a new manager, manage it yourself, or liquidate. Your stocks do not disappear, but the transition can be inconvenient, which is why choosing a financially stable provider matters.

Can NRIs invest in Large Cap PMS in India?

Yes. NRIs can invest through an NRE or NRO account with a PIS (Portfolio Investment Scheme) account and completed KYC. Capital gains are taxed like resident Indians (20% STCG, 12.5% LTCG above ₹1.25 lakh), but NRIs must also consider their resident country's tax laws, any Double Taxation Avoidance Agreement, and FEMA rules on repatriation. Consult a chartered accountant familiar with NRI taxation before investing.

What role should Large Cap PMS play in my portfolio?

PMS should be one component, not the whole portfolio. First secure an emergency fund, insurance, zero high-interest debt, and retirement contributions. Keep equity to a sensible share of net worth, allocate the bulk of large cap exposure to low-cost index or mutual funds, and use PMS (roughly 10-20% of equity) only where customisation, direct ownership, or tax-loss coordination adds real value. Use a minimum 5-year, ideally 7-10 year, horizon.

Conceptual · Article 1.1.5.1

All About Large Cap PMS.

Direct Ownership of India's Biggest Companies, at a Price Most Portfolios Should Question.

Published as on 9 July 2026

Large Cap Portfolio Management Services put India's top 100 companies directly into your own demat account, professionally managed, for a ₹50 lakh SEBI minimum. The appeal is real: direct ownership, customisation, and a manager building around your existing holdings. But the arithmetic is unforgiving. Total costs of 1-3%+ a year and a tax drag that mutual funds simply do not carry mean that below ₹5 crore of equity, a low-cost index or mutual fund usually keeps more of your money working. This is a guide to what large cap PMS is, what it costs, how it is taxed, and when it actually earns its fee.

₹50 Lakh

SEBI Minimum Investment

Top 100

Companies by Market Capitalisation

1-3%+

Total Annual Cost of Ownership

20% / 12.5%

STCG / LTCG Taxed in Your Hands

Executive Summary · Page 2

Executive Summary · 7 Findings

Large cap PMS is not a better version of a large cap fund. It is a different structure with different economics: you own the actual shares, you gain customisation, and in exchange you accept higher fees and a tax bill that arrives every time the manager sells.

This article covers what large cap PMS is and how it works, why managers favour large caps, the three fee models, how gains are taxed in your hands, the tax drag versus mutual funds, the real risks, and the framework for deciding whether and how to use it.

Key Findings

You own the shares directly, not units of a pooled fund.

In a mutual fund you own units; the fund owns the stocks. In PMS the top-100 shares sit in your own demat account, in your name. That difference drives everything that follows: customisation, transparency, and the way tax is levied.

The SEBI minimum is ₹50 lakh, but the sensible threshold is far higher.

SEBI raised the PMS minimum from ₹25 lakh to ₹50 lakh in January 2020. Yet PMS works best as 10-20% of your equity, which implies ideally ₹2.5-5 crore of total equity first. Putting your entire ₹50 lakh into one manager is concentration, not a portfolio.

Gains are taxed in your hands: 20% STCG, 12.5% LTCG above ₹1.25 lakh.

Because you own the securities, every sale by the manager is your capital gain. Held 12 months or less: 20%. Held longer: 12.5% above a ₹1.25 lakh annual exemption (Finance Act 2024, effective 23 July 2024). Dividends are taxed at your slab.

PMS carries a tax drag that mutual funds do not.

You owe tax whenever the manager books a profit, even if you withdraw nothing. In a mutual fund, gains compound untaxed until you redeem. Every rupee paid in tax mid-journey is a rupee that stops compounding, a structural headwind on high-turnover strategies.

Total cost of ownership runs 1-3%+ a year once everything is counted.

Fixed fees (0.25-2.5%), performance fees (10-20% above a hurdle), brokerage, STT at 0.1%, custody, demat, audit, and 18% GST on fees stack up. On a 12% gross return, a 2.5% all-in cost quietly turns ₹1 crore over 20 years from roughly ₹9.6 crore into ₹6.1 crore.

Large caps offer stability and liquidity, not spectacular growth.

The top 100 are established, heavily researched, highly liquid businesses. That makes them easy to trade in size and lower in volatility, but a ₹5 lakh crore company rarely doubles quickly. Large cap PMS is chosen for capital preservation and professional management, not aggressive returns.

Below ₹5 crore, mutual or index funds usually win.

For ₹50 lakh to ₹2 crore of equity, the fee savings and tax deferral of large cap mutual or index funds outweigh PMS customisation. PMS earns its keep at ₹5 crore-plus, or for specific jobs: coordinating tax-loss harvesting, diversifying concentrated ESOP wealth, or accessing a genuinely distinctive strategy.

Full analysis continues across Parts I to V below

At A Glance

Metric	Value	Detail
SEBI Minimum	₹50 Lakh	Raised from ₹25L in Jan 2020
Investment Universe	Top 100	By market capitalisation
Large Cap Threshold	~₹91,500 Cr	Approx. market cap, mid-2025
Typical Holdings	15-25 stocks	More concentrated than funds
Total Cost of Ownership	1-3%+	Fees + brokerage + STT + GST
STCG Tax (<12 months)	20%	Taxed in your hands
LTCG Tax (>12 months)	12.5%	₹1.25L/year exempt

Exhibit 01: The Fee Drag Over 20 Years

All-In Cost	Net Return	₹1 Cr After 20 Years
Low-cost fund (0.5%)	11.5%	₹8.65 Cr
PMS (2.5% all-in)	9.5%	₹6.14 Cr
Difference (lost to costs)		~₹2.5 Cr

Assumes 12% gross return, before tax drag. Illustrative. ADWIZR analysis.

The Opening · Page 3

The Opening

Large Cap Portfolio Management Services is a customised investment service where a SEBI-registered portfolio manager builds and runs a portfolio of India's largest companies on your behalf. The defining feature is ownership: unlike a mutual fund, where you hold units of a pooled vehicle, in PMS you directly own the actual shares in your own demat account.

The "large cap" part refers to the companies the manager may buy. Under SEBI's 2017 categorisation, large caps are the top 100 companies by market capitalisation. As of mid-2025, a company typically needed a market cap of roughly ₹91,500 crore to qualify, a threshold that has climbed with the market. These are the household names: Reliance Industries, TCS, HDFC Bank, Infosys.

Practically, you transfer ₹50 lakh or more, the manager buys large cap shares based on their research, and those shares sit in your name. The manager then actively monitors, trims, and adds positions. Because your portfolio is yours, it can be built around your existing holdings and tax situation, something a pooled fund can never do.

"In a mutual fund, a hundred investors own the same portfolio. In PMS, your ₹50 lakh account can look nothing like the next investor's, even with the same manager. Ownership is the whole point, and also the whole cost."
The Structural Difference

What large cap PMS is not: it is not "safe" (all equity carries risk), it is not a route to spectacular returns (large caps trade growth for stability), and it is not automatically better than a fund (for most investors, the fees and tax drag make it worse). It is a structure that suits a specific investor at a specific scale.

Structure

Part I

What It Is, How It Works, and the ₹50 Lakh Minimum

Part II

Why Large Caps, and What to Realistically Expect

Part III

Fees, Costs, and the Fee-Drag Arithmetic

Part IV

Taxation and the Tax Drag Versus Mutual Funds

Part V

The Real Risks You Are Taking On

Part VI

The Verdict: Portfolio Role and Choosing a Manager

What Large Cap PMS Provides

✓ Direct ownership of shares in your demat

✓ Customisation around existing holdings

✓ Full transparency of every transaction

✓ Active professional management

What It Does Not Provide

✕ Capital safety (all equity carries risk)

✕ Low cost (1-3%+ all-in)

✕ Tax deferral (gains taxed as booked)

✕ Guaranteed outperformance

Part I

What It Is and How It Works

Direct ownership, the mechanics of a managed account, and why SEBI sets the entry bar at ₹50 lakh.

Part I: What It Is and How It Works · Page 4

The Mechanics of Ownership

The single most important idea in PMS is direct ownership. In a mutual fund, 100 investors might each contribute ₹1 lakh and the fund buys ₹1 crore of stocks; everyone owns the same portfolio through units. In PMS, your ₹50 lakh buys shares registered in your demat account, and your portfolio can differ from another client's even under the same manager.

That structure has real consequences. You can see every trade as it happens. The manager can build around a position you already hold, if you own ₹15 lakh of Reliance, they can underweight or exclude it. And because the securities are yours, every gain the manager books is taxed as if you had traded the stock yourself.

Core truth: PMS is a managed account, not a product. You are hiring a manager to run your money, in your name, under a mandate you agree to. The upside is control and customisation; the trade-off is cost and tax immediacy.

Discretionary vs Non-Discretionary

Discretionary PMS: the manager has full authority to buy and sell within the mandate. Most large cap PMS is discretionary. The manager can consider your existing holdings to avoid duplication, but the decisions are theirs.

Non-discretionary PMS: the manager recommends, but you approve each decision. You keep control at the cost of speed and convenience.

"Discretionary PMS cannot invest in unlisted securities, and exposure to related parties is capped at 30% of your portfolio. The guard-rails are real, but they are not the same as the tighter restrictions mutual funds live under."
The Regulatory Perimeter

The ₹50 Lakh Minimum

SEBI mandates a ₹50 lakh minimum for all PMS, raised from ₹25 lakh in January 2020 to ensure only investors with sufficient capacity and risk tolerance use the vehicle. Some boutique firms set their own bar at ₹1 crore, ₹5 crore, or higher.

Why The Threshold Matters

₹50 lakh is enough for a manager to build 15-25 meaningful positions. At ₹10 lakh, the portfolio would be a scatter of tiny, insignificant holdings, and the customisation advantage would vanish.

The Withdrawal Rule

Your portfolio value must not fall below ₹50 lakh due to voluntary withdrawals. If markets push it below that, you are not forced to top up, but you cannot withdraw further until it recovers.

Eligibility Is Not Suitability

Having ₹50 lakh makes you eligible. It does not make PMS suitable. If you put your entire ₹50 lakh into one manager, you have no emergency fund, no debt allocation, and no diversification, one strategy, one manager, all your risk. Industry practice treats PMS as 10-20% of equity, implying ₹2.5-5 crore of total equity before it belongs in the plan.

Structure	You Own	Min. Ticket
PMS	Actual shares	₹50 lakh
Mutual Fund	Fund units	₹500 (SIP)
Cat III AIF	Fund units	₹1 crore

Part II

Why Large Caps

What makes the top 100 attractive for professional management, the growth trade-off, and what returns are realistic.

Part II: Why Large Caps · Page 6

Why Managers Favour the Top 100

Stability and predictability: Large caps are established businesses that have survived multiple cycles. A Hindustan Unilever or Asian Paints comes with decades of operating history and a well-understood model. They can still fall, but the risk of outright business failure is minimal.

Liquidity: The top 100 are heavily traded, so a manager can buy or sell in size without moving the price. Selling ₹10 lakh of Reliance is effortless, which matters for rebalancing and for meeting your withdrawals.

Information availability: These companies disclose extensively and carry deep analyst coverage, so decisions rest on reliable data rather than guesswork.

Lower volatility: A large cap might move 2-3% on a typical day where a small cap moves 5-10%. Lower volatility makes strategies easier to run, and makes you likelier to stay invested.

The trade-off: Large caps have lower growth potential. A company already worth ₹5 lakh crore struggles to double, while a ₹5,000 crore company can. Large cap PMS is chosen for stability and preservation, not for the fastest possible compounding.

What to Realistically Expect

Large caps deliver steady, moderate returns over long periods, typically in the region of 10-12% annually over 10-plus years, not spectacular short-term gains. A manager may add or subtract from that through stock selection, but the category's character is stability.

Reasonable to Expect

Broadly market-like returns with lower drawdowns than mid or small caps; dividend income taxed at your slab; a portfolio you can understand line by line.

Unrealistic to Expect

Doubling your money in two years; immunity from corrections; guaranteed outperformance because a manager is involved. Blue chips fell 30-40% in March 2020, and large cap PMS portfolios fell 25-35% with them.

Who It Suits

Good Fit

HNIs with ₹5 crore-plus equity who value direct ownership, customisation around concentrated holdings, and a 7-10 year horizon.

Poor Fit

Investors with exactly ₹50 lakh, a short horizon, or an expectation that "professional management" removes risk or guarantees alpha.

Part III

Fees and Costs

The three fee models, the charges that hide beneath them, and why total cost is the number that decides outcomes.

Part III: Fees and Costs · Page 8

Three Fee Models

Fixed-only

A set annual percentage of portfolio value, typically 0.25-2.5%, charged whether you gain or lose, usually calculated quarterly on average value. On ₹50 lakh at 1.5%, that is ₹75,000 a year. Predictable, and it avoids the incentive to over-trade in good years.

Performance-only

Zero fixed fee, but 10-20% of profits above a hurdle (often 8% or the index return). On a ₹50 lakh portfolio that grows to ₹60 lakh with an 8% hurdle, the excess above ₹4 lakh is ₹6 lakh; a 20% fee takes ₹1.2 lakh. A high-water mark ensures you are not charged twice for recovering old ground.

Hybrid (most common)

A lower fixed fee (0.5-1.25%) plus a performance fee (10-15%) above a hurdle. Example: 1% fixed plus 15% above a 10% hurdle. On ₹50 lakh growing to ₹60 lakh, that is roughly ₹55,000 fixed plus ₹75,000 performance, ₹1.3 lakh in all.

Research note: Studies (e.g. Capitalmind) suggest fixed-only structures often serve investors better long term, because performance fees can be "front-loaded", earned heavily in one good year and never returned when later years disappoint.

The Costs Beneath the Fee

The headline fee is only part of the bill. Layered on top are:

▪ Brokerage, roughly 0.05-0.25% per trade
▪ Securities Transaction Tax at 0.1% on buy and sell
▪ Custodian and demat charges
▪ Audit and fund-accounting fees
▪ 18% GST on management and performance fees

Together these add roughly 0.3-0.7% a year, pushing total cost of ownership to 1-3%+.

Exhibit 02: PMS vs Fund Cost

Vehicle	Typical All-In Cost
Index fund (Direct)	0.1-0.5%
Large cap fund (Direct)	0.5-1.0%
Large cap PMS	1-3%+

Why It Compounds

On ₹1 crore at 12% gross, keeping 9.5% (after 2.5% costs) yields about ₹6.14 crore in 20 years; keeping 11.5% yields about ₹8.65 crore. A 2% cost gap is worth ~₹2.5 crore. Fees are the most reliable predictor of what you keep.

Part IV

Taxation and Tax Drag

How gains are taxed in your hands, and the structural tax drag that separates PMS from mutual funds.

Part IV: Taxation and Tax Drag · Page 10

Taxed in Your Hands

Because you own the securities directly, there is no pooled vehicle between you and the stocks. Every gain the manager realises is your capital gain, reported on your return (typically ITR-2 or ITR-3), with advance tax due through the year.

Short-Term Capital Gains (STCG)

Shares sold within 12 months: gains taxed at 20% (raised from 15% on 23 July 2024), plus surcharge and cess.

Long-Term Capital Gains (LTCG)

Shares held over 12 months: gains taxed at 12.5% above a ₹1.25 lakh annual exemption (raised from 10% / ₹1 lakh on 23 July 2024).

Dividends are added to your income and taxed at your slab. Buybacks are now treated as capital gains in the investor's hands. PMS fees generally cannot be deducted against capital gains, they are a service charge, not a cost of acquisition, unless you report PMS income as business income, which depends on your trading pattern. Consult a CA.

Reporting reality: Your PMS provider issues detailed statements and an auditor certificate each year. Because everything happens in your demat account, accurate reporting and timely advance tax are your responsibility.

The Tax Drag vs Mutual Funds

Here is the difference that matters most. In PMS you pay tax every time the manager books a profit, even if you have withdrawn nothing. In a mutual fund, the fund manager can trade freely and you owe zero tax until you redeem your units.

PMS

Manager books ₹5L gains this year

You owe tax now, though you withdrew nothing

Taxed money stops compounding

Mutual Fund

Fund books ₹5L gains this year

You owe nothing until you redeem

Gains keep compounding untaxed

Why Turnover Matters

A high-turnover PMS strategy triggers large annual tax bills that quietly erode compounding. When evaluating a manager, ask about the portfolio turnover ratio: for large cap strategies, 30-80% is common; above 100% means the whole portfolio is replaced more than once a year.

One offsetting advantage: because losses and gains are realised in your own account, a good manager can coordinate tax-loss harvesting, selling losers to offset gains, in a way a pooled fund cannot do for you individually. For investors with complex portfolios, this can be a genuine, if narrow, edge.

Part V

The Real Risks

Neither "large cap" nor "professionally managed" means safe. The risks you are actually taking on.

Part V: The Real Risks · Page 12

What Can Go Wrong

Market risk

Blue chips fall. In March 2020, HDFC Bank, Infosys, and Reliance dropped 30-40% from their peaks, and large cap PMS portfolios fell 25-35%. The question is never whether but how much and for how long.

Manager risk

Your outcome depends entirely on the manager's skill. Unlike an index fund with a predictable result, PMS outcomes vary widely. A strong three-year record built on a lucky sector bet can be followed by years of underperformance.

Concentration risk

With 15-25 stocks, PMS is more concentrated than a 40-60 stock fund. Heavy exposure to one or two sectors magnifies both wins and losses; several large cap PMS portfolios carried 40-50% in financials and IT in 2021-22.

Fee and tax drag

High fees compound against you, and taxes on churned gains reduce compounding. Together they are the quietest and most reliable destroyers of long-term return in PMS.

Liquidity risk

Large cap stocks are liquid, but the PMS structure is not instant. Positions must be sold and settled; some providers levy exit loads or notice periods. Cash typically reaches you in 3-7 business days, not same-day like a fund.

Behavioural risk

Seeing every holding in real time invites emotional reactions, panic-selling into falls, adding at peaks. PMS demands more discipline than a fund precisely because it is so transparent.

Past-performance risk

Every pitch shows historical returns. A manager who delivered 25% in a bull market may deliver 8% in a sideways one. Past performance is not a forecast; treat glossy track records with scepticism.

The Mismatch Trap

Large cap PMS is wrong for short-term goals. If you need the money in under three years, no equity PMS belongs in the plan.

Part VI

The Verdict

Where large cap PMS belongs, and how to choose a manager if it does.

Part VI: The Verdict · Page 14

The Assessment

Large cap PMS is one component of a plan, never the whole of it. Before it belongs anywhere, secure the basics: an emergency fund, term and health insurance, zero high-interest debt, and retirement contributions to EPF (~8.25%), PPF (7.1%), and NPS.

Within equity, most large cap exposure should sit in low-cost index or mutual funds; PMS is the satellite, roughly 10-20% of equity, used where its customisation earns its cost: coordinating tax-loss harvesting across a complex portfolio, diversifying concentrated ESOP wealth, or accessing a genuinely distinctive strategy.

"Every rupee in PMS at 2-3% cost could instead sit in an index fund at 0.1-0.5%. On ₹50 lakh that is ₹75,000 to ₹1.25 lakh in extra fees every year. The only honest question is: what am I getting for that money?"
The Opportunity Cost

For ₹50 lakh to ₹2 crore of equity: large cap mutual or index funds almost always offer better value. For ₹5 crore-plus: PMS can add real value through customisation and direct ownership, and the extra cost matters less as a share of total wealth.

ADWIZR · July 2026

How to Choose a Manager

Verify SEBI registration

Confirm registration on sebi.gov.in, the required ₹5 crore entity net worth, and a clean regulatory record.

Judge risk-adjusted returns, not headlines

Look at Sharpe ratio, information ratio, maximum drawdown, and upside/downside capture versus the Nifty 100 TRI over 3-5 years, not just the top-line number.

Demand consistency over a lucky year

A manager who beats the benchmark by 2-3% in 7 of 10 years is worth more than one who wins big once and lags the rest.

Price the total cost and read the disclosure

Model total cost at 8%, 12%, and 15% returns. Read the SEBI disclosure document in full. Check turnover, holdings (15-25), and exit terms.

₹50L

SEBI minimum

Suitability starts higher

1-3%+

All-in cost

The number that decides

₹5 Cr+

Where it fits

Below that, prefer funds

The Bottom Line

Large cap PMS gives you direct ownership and customisation of India's top 100, at a real cost. Below ₹5 crore of equity, low-cost funds usually keep more of your money. Above it, or for specific customisation jobs, PMS can earn its fee, but only if you price the total cost, respect the tax drag, and choose a manager on consistency, not last year's number.

Investor FAQ

Questions Indian Investors Ask

Seven questions, answered directly.

Investor FAQ · Page 16

Frequently Asked Questions

Q1 Can NRIs invest in Large Cap PMS?

Yes. NRIs invest through an NRE or NRO account with a PIS (Portfolio Investment Scheme) account and completed KYC. Capital gains are taxed like resident Indians, 20% STCG and 12.5% LTCG above ₹1.25 lakh, but you must also account for your resident country's tax laws, any Double Taxation Avoidance Agreement, and FEMA rules on repatriation. Consult a CA who specialises in NRI taxation before investing.

Q2 What happens if the PMS provider shuts down?

Your securities sit in your own demat account with an independent custodian, so they remain yours if the provider closes, SEBI requires this separation precisely to protect you. Practically, the portfolio stops being managed, so you would appoint a new manager, run it yourself, or liquidate. Your stocks do not vanish, but the transition can be inconvenient, which is why financial stability of the provider matters when you choose.

Q3 How often is a Large Cap PMS portfolio rebalanced?

It varies by manager. Value-focused managers may rebalance once or twice a year; more active ones monthly or even weekly. Higher frequency means higher transaction costs and more frequent tax events, both of which reduce net returns. Ask about the typical holding period and annual turnover ratio: for large cap strategies, 30-80% is common, while above 100% signals heavy trading.

Q4 Can I invest through my company or as an HUF?

Yes. Companies, HUFs, and trusts can invest in PMS; the ₹50 lakh minimum applies regardless of entity. HUFs are taxed like individuals (20% STCG, 12.5% LTCG above ₹1.25 lakh); company investments are taxed at corporate rates. Corporate and HUF investments need more documentation, board resolutions, authorisation letters, entity PAN, and some trusts may require additional approvals.

Q5 How is PMS different from a large cap AIF?

In an AIF, investor money is pooled like a fund; in PMS you own securities directly. Category III AIFs can use leverage and derivatives more freely but are taxed at the fund level at the maximum marginal rate (~43% with surcharge and cess) regardless of holding period, and their minimum is ₹1 crore. AIFs often have lock-ins and fixed lifecycles; PMS is open-ended with better liquidity. Choose PMS for direct ownership and customisation; choose an AIF for specialised strategies unavailable in PMS.

Q6 Will the manager consider my existing holdings?

In discretionary PMS, a good manager will factor in your existing holdings to avoid duplication, if you already own ₹15 lakh of Reliance, they may underweight or exclude it. In non-discretionary PMS, you retain control over coordination. This integrated construction is one of PMS's real advantages over a fund, but only if the provider actually delivers it, so ask explicitly how they handle clients with existing equity portfolios.

Q7 What happens if I withdraw partially?

Partial withdrawals are generally allowed. The manager sells a proportional slice of holdings, which triggers capital gains tax even though you are not fully exiting, and some providers charge exit loads within the first 1-2 years. Your remaining value must stay above ₹50 lakh for voluntary withdrawals; if market falls take you below, you can stay invested but cannot withdraw further until it recovers. Proceeds usually arrive in 3-7 business days.

Key Terms & Definitions

Portfolio Management Service (PMS)

A SEBI-regulated managed account in which a portfolio manager buys and sells securities held directly in the investor's own demat account. Minimum investment is ₹50 lakh. Distinct from a mutual fund, where investors own units of a pooled vehicle.

Large Cap Company

One of India's top 100 companies ranked by market capitalisation under SEBI's 2017 categorisation. As of mid-2025, roughly ₹91,500 crore of market cap was needed to qualify. Examples include Reliance Industries, TCS, HDFC Bank, and Infosys.

Discretionary PMS

A PMS mandate in which the manager has full authority to make buy and sell decisions within agreed limits, without seeking approval for each trade. Cannot invest in unlisted securities; related-party exposure is capped at 30% of the portfolio.

Tax Drag

The reduction in compounding that occurs because, in PMS, capital gains are taxed each time the manager books a profit, even without a withdrawal. Mutual funds avoid this by deferring capital gains tax until the investor redeems units.

High-Water Mark

A performance-fee rule under which the manager can charge only on new profits above the portfolio's previous peak value, preventing the investor from paying performance fees twice for recovering the same ground.

Hurdle Rate

The minimum return a PMS must generate before a performance fee applies, commonly around 8% or the benchmark index return. Only gains above the hurdle are subject to the performance fee.

Turnover Ratio

A measure of how frequently a portfolio's holdings are replaced in a year. For large cap strategies, 30-80% is typical; above 100% indicates the entire portfolio is turned over more than once annually, raising costs and tax events.

Securities Transaction Tax (STT)

A tax levied at 0.1% on both the purchase and sale of delivery-based equity. Deducted automatically on each PMS trade, it adds to the total cost of ownership alongside brokerage, custody, and 18% GST on fees.