{"id":4250,"date":"2021-08-31T18:05:08","date_gmt":"2021-08-31T12:35:08","guid":{"rendered":"https:\/\/www.tickertape.in\/blog\/?p=4250"},"modified":"2022-05-24T19:13:42","modified_gmt":"2022-05-24T13:43:42","slug":"portfolio-manager","status":"publish","type":"post","link":"https:\/\/www.tickertape.in\/blog\/portfolio-manager\/","title":{"rendered":"What Is A Portfolio Manager 2021 Guide \u2013 Role, Importance and More"},"content":{"rendered":"\n<p>Investing in the <a href=\"https:\/\/www.tickertape.in\/blog\/how-to-invest-in-shares\/\">stock market<\/a> demands time. The most challenging part is to select worthy companies whose stock one may <a href=\"https:\/\/www.tickertape.in\/blog\/why-should-you-prioritise-investing\/\">invest<\/a> in that can provide a good amount of returns in the future.<\/p>\n\n\n\n<p><a href=\"https:\/\/www.tickertape.in\/blog\/advantages-disadvantages-of-mutual-funds\/?utm_source=blog&amp;utm_medium=article\">Mutual funds<\/a> come out as alternatives for investors seeking a professionally managed avenue for <a href=\"https:\/\/www.tickertape.in\/blog\/what-is-equity\/\">equity<\/a> exposure. They present a <a href=\"https:\/\/www.tickertape.in\/blog\/can-i-buy-multiple-stocks-in-one-trade\/\">basket<\/a> of well-researched stocks and other assets that is curated by highly professional managers, called portfolio managers. In this article, we shall delve into who are portfolio managers and what their role is, and how they help investors capture opportunities from the market.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_66_1 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.tickertape.in\/blog\/portfolio-manager\/#Who-is-a-portfolio-manager\" title=\"Who is a portfolio manager?\">Who is a portfolio manager?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.tickertape.in\/blog\/portfolio-manager\/#What-does-a-portfolio-manager-do\" title=\"What does a portfolio manager do?\">What does a portfolio manager do?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.tickertape.in\/blog\/portfolio-manager\/#Assess-clients-financial-goal\" title=\"Assess client\u2019s financial goal\">Assess client\u2019s financial goal<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.tickertape.in\/blog\/portfolio-manager\/#Implement-strategic-asset-allocation\" title=\"Implement strategic asset allocation\">Implement strategic asset allocation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.tickertape.in\/blog\/portfolio-manager\/#Managers-regularly-change-investment-strategies\" title=\"Managers regularly change investment strategies\">Managers regularly change investment strategies<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.tickertape.in\/blog\/portfolio-manager\/#Manage-the-risk\" title=\"Manage the risk\">Manage the risk<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.tickertape.in\/blog\/portfolio-manager\/#Reports-that-clients-can-expect-from-their-portfolio-managers\" title=\"Reports that clients can expect from their portfolio managers\">Reports that clients can expect from their portfolio managers<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.tickertape.in\/blog\/portfolio-manager\/#SEBI-regulations-for-portfolio-managers\" title=\"SEBI regulations for portfolio managers\">SEBI regulations for portfolio managers<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.tickertape.in\/blog\/portfolio-manager\/#Types-of-portfolio-managers\" title=\"Types of portfolio managers\">Types of portfolio managers<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\" id=\"who\"><span class=\"ez-toc-section\" id=\"Who-is-a-portfolio-manager\"><\/span><strong>Who is a portfolio manager?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A portfolio manager is a skilled and qualified individual who is adept at making the right investment decisions to maximize wealth for their clientele. The calls of a <a href=\"https:\/\/www.tickertape.in\/blog\/mitigating-portfolio-risk-through-diversification\/?utm_source=blog&amp;utm_medium=article\">portfolio<\/a> manager are deep-rooted in research and an in-depth understanding of the investment product as well as market economics that affect the returns from the financial product.<\/p>\n\n\n\n<p>Portfolio managers generally service clients with a large investible corpus, and so are mostly either dealing with high <a href=\"https:\/\/www.tickertape.in\/blog\/net-worth\/\">net worth<\/a> individuals, or working with firms and helping manage the portfolio of institutional clients.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"what\"><span class=\"ez-toc-section\" id=\"What-does-a-portfolio-manager-do\"><\/span><strong>What does a portfolio manager do?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>When wealthy individuals require financial planning assistance, they may connect with a portfolio manager that can be an individual or an institution. A portfolio manager helps investors &#8211; individuals, trusts and firms &#8211; form a plan to capture high returns from investments even as they strategize to&nbsp; protect their wealth for&nbsp; the future.&nbsp;&nbsp;<\/p>\n\n\n\n<p>To help achieve the financial goals of their clients, portfolio managers may perform the following steps:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Assess-clients-financial-goal\"><\/span><strong>Assess client\u2019s financial goal<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Portfolio managers begin with understanding the financial objective of the client. For instance, if an investor wants fixed and steady returns, then the manager may include <a href=\"https:\/\/www.tickertape.in\/blog\/what-are-debt-funds\/?utm_source=blog&amp;utm_medium=article\">debt<\/a> instruments in the investor\u2019s portfolio. Alternatively, if an investor has a high-risk appetite, and is ready to take a risk on the capital invested, the manager may introduce the client to hedge funds or other high risk equity investments.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Implement-strategic-asset-allocation\"><\/span><strong>Implement strategic asset allocation<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Strategic <a href=\"https:\/\/www.tickertape.in\/blog\/why-is-asset-allocation-one-of-the-most-important-aspects-of-portfolio-construction\/\">asset allocation<\/a> includes setting different weightage for different asset classes in the portfolio. For instance, 30% of the funds allocation to debt instruments and 70% to the <a href=\"https:\/\/www.tickertape.in\/blog\/equity-investment\/?utm_source=blog&amp;utm_medium=article\">equity<\/a> market. Managers do this to manage the risk and reward ratio as per the client\u2019s risk appetite.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Managers-regularly-change-investment-strategies\"><\/span><strong>Managers regularly change investment strategies<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In the financial markets, nothing is certain. There are times when the metal sector is rallying, while sometimes the IT sector starts rallying. Therefore, to meet the client\u2019s requirements, managers need to rebalance the portfolio periodically.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Manage-the-risk\"><\/span><strong>Manage the risk<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The portfolio manager has to take care of several risks while allocating the <a href=\"https:\/\/www.tickertape.in\/blog\/difference-between-nps-and-sip\/?utm_source=blog&amp;utm_medium=article\">funds<\/a>, the most popular ones being security selection risk and investment style risk. Security selection risk, as the name suggests, refers to the chance of a wrong pick. Usually, portfolio managers keep indexes as their benchmark and then try to aim for benchmark-beating returns.<\/p>\n\n\n\n<p>Investment style risk refers to choosing a particular strategy such as growth investing. Should the market turn the tide, the portfolio may be at risk.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"reports\"><span class=\"ez-toc-section\" id=\"Reports-that-clients-can-expect-from-their-portfolio-managers\"><\/span><strong>Reports that clients can expect from their portfolio managers<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Clients can expect a performance report from portfolio manageRs While the floor is open for the client and the portfolio manager to figure out what works best for both, ideally, the timeline of reporting should not exceed six months. And also, clients can ask for reports as and when required.&nbsp;<\/p>\n\n\n\n<p>The performance report includes:&nbsp;<\/p>\n\n\n\n<ul><li>The value of the portfolio as per the current market price. Also, the performance report should consist of a description of the security and type of asset class.&nbsp;<\/li><\/ul>\n\n\n\n<ul><li>The performance report should contain details of every transaction. That is, there should be all purchase and sale transactions, including the date of the transaction and taxes and charges levied.&nbsp;<\/li><\/ul>\n\n\n\n<ul><li>The performance report contains interest received on the invested capital amount.&nbsp;<\/li><\/ul>\n\n\n\n<ul><li>All the expenses incurred by the fund manager or the asset management company are in the performance report.&nbsp;<\/li><\/ul>\n\n\n\n<ul><li>There is a separate section on the risks related to the investment portfolio mentioned in the performance report. The investor should be familiar with all types of risks related to the portfolio.&nbsp;<\/li><\/ul>\n\n\n\n<p>Some portfolio managers make the detailed performance reports available on their websites. Clients, with a unique number, can log in to the website and download it. However, if not, the client has all the rights to obtain the performance report from the manager.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"SEBI\"><span class=\"ez-toc-section\" id=\"SEBI-regulations-for-portfolio-managers\"><\/span><strong>SEBI regulations for portfolio managers<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In India, regulations on <a href=\"https:\/\/www.tickertape.in\/blog\/portfolio-management\/\">portfolio management<\/a> services were introduced in 1993. The Securities Exchange Board Of India (<a href=\"https:\/\/www.tickertape.in\/blog\/securities-and-exchange-board-of-india-functions-powers-and-regulations-of-sebi\/?utm_source=blog&amp;utm_medium=article\">SEBI<\/a>) keeps reforming them from time to time to safeguard the interests of investors and to enhance the security. Some of the regulations are:&nbsp;<\/p>\n\n\n\n<ul><li>The market watchdog, <a href=\"https:\/\/www.tickertape.in\/blog\/securities-and-exchange-board-of-india-functions-powers-and-regulations-of-sebi\/\">SEBI<\/a>, does not authorize any portfolio management company to offer the services without a comprehensive agreement between the client and the company. Both parties have to sign an agreement stating all the details of the relationship between the investor and the portfolio manager.&nbsp;<\/li><\/ul>\n\n\n\n<ul><li><a href=\"https:\/\/www.tickertape.in\/blog\/stock-exchanges-in-india\/?utm_source=blog&amp;utm_medium=article\">SEBI<\/a> has set a limit of Rs 50 lakh as a minimum investment amount by clients in Portfolio Management Service or PMS.<\/li><\/ul>\n\n\n\n<ul><li>The portfolio manager should be mandatorily registered with the SEBI.&nbsp;&nbsp;<\/li><\/ul>\n\n\n\n<ul><li>As per SEBI, the portfolio manager has to periodically send a detailed performance report.&nbsp;&nbsp;&nbsp;<\/li><\/ul>\n\n\n\n<ul><li>An investor needs to sign the full disclosure form for disclosing the source of income and the mode of payment.&nbsp;<\/li><\/ul>\n\n\n\n<ul><li>An investor needs to pay the portfolio manager fee in regular intervals and not upfront.&nbsp;<\/li><\/ul>\n\n\n\n<ul><li>If any discrepancy arises, the investor can approach an investor relations officer. The disclosure document comprises the investor relations officer\u2019s contact details.&nbsp;<\/li><\/ul>\n\n\n\n<ul><li>Portfolio managers can not ask for an upfront payment for the services and the agreement between investors and the company should consist of all charges.&nbsp;<\/li><\/ul>\n\n\n\n<ul><li>There shouldn&#8217;t be any third party involved between the investor and portfolio manager. The agreement should be mutually agreed upon between two parties only.&nbsp;<\/li><\/ul>\n\n\n\n<ul><li>The portfolio manager should report to the investor on a regular basis.&nbsp;<\/li><\/ul>\n\n\n\n<ul><li>The base net worth requirement of portfolio managers has been raised to <a href=\"https:\/\/economictimes.indiatimes.com\/markets\/stocks\/news\/sebi-raises-minimum-pms-investment-limit-to-rs-50-lakh-from-25-lakh\/articleshow\/72143380.cms?from=mdr\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Rs 5 cr<\/a><\/li><\/ul>\n\n\n\n<ul><li>Similarly, asset management companies should not invest more than 25% of the portfolio in unlisted shares or assets.&nbsp;<\/li><\/ul>\n\n\n\n<p>Also, the investor needs to have a demat account to avail services of the portfolio manager.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"types\"><span class=\"ez-toc-section\" id=\"Types-of-portfolio-managers\"><\/span><strong>Types of portfolio managers<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Generally, there are two types of portfolio managers: Discretionary and Non-discretionary portfolio managers.&nbsp;<\/p>\n\n\n\n<p><strong>Discretionary<\/strong> portfolio manager is a kind of a trustee of the wealth of the client. They manage the funds independently. They do not need to consult the client every time before making any investment and instead can invest on behalf of the client in a variety of securities as per the client\u2019s requirement.<\/p>\n\n\n\n<p><strong>Non-discretionary<\/strong> portfolio manager works based on a consultative investment approach, unlike a discretionary manager. The portfolio manager only suggests investment schemes. The investor chooses the scheme and term as per their requirement, then the investment decision gets finalized.<\/p>\n\n\n<span class='bctt-click-to-tweet'><span class='bctt-ctt-text'><a href=\"https:\/\/twitter.com\/intent\/tweet?url=https%3A%2F%2Fwww.tickertape.in%2Fblog%2Fportfolio-manager%2F&#038;text=Discritionary%20portfolio%20manager%20independently%20manager%20the%20client%27s%20wealth%20whereas%20Non-discretionary%20ones%20only%20suggest%20schemes%20to%20their%20clients.&#038;via=TickertapeIN&#038;related=TickertapeIN\" target=\"_blank\" rel=\"noopener noreferrer\">Discritionary portfolio manager independently manager the client&#039;s wealth whereas Non-discretionary ones only suggest schemes to their clients. <\/a><\/span><a href=\"https:\/\/twitter.com\/intent\/tweet?url=https%3A%2F%2Fwww.tickertape.in%2Fblog%2Fportfolio-manager%2F&#038;text=Discritionary%20portfolio%20manager%20independently%20manager%20the%20client%27s%20wealth%20whereas%20Non-discretionary%20ones%20only%20suggest%20schemes%20to%20their%20clients.&#038;via=TickertapeIN&#038;related=TickertapeIN\" target=\"_blank\" class=\"bctt-ctt-btn\" rel=\"noopener noreferrer\">Click To Tweet<\/a><\/span>\n\n\n<p>You have done your homework through this post before approaching a portfolio manager. Take the decision wisely. Choosing a financial manager is a crucial part of your investing journey. There must be confidence in the portfolio manager&#8217;s competence, and integrity. Moreover, analyzing the past performance of the manager helps to secure great returns.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Want to know what a portfolio manager does? Click here to read about the career path of a portfolio manager and find out what exactly a portfolio manager does!<\/p>\n","protected":false},"author":54,"featured_media":4156,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"_lmt_disableupdate":"no","_lmt_disable":"no","footnotes":""},"categories":[8],"tags":[668],"acf":[],"modified_by":"Aradhana Gotur","jetpack_featured_media_url":"https:\/\/www.tickertape.in\/blog\/wp-content\/uploads\/2021\/08\/Informative-1-4.png?wsr","_links":{"self":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/4250"}],"collection":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/users\/54"}],"replies":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/comments?post=4250"}],"version-history":[{"count":4,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/4250\/revisions"}],"predecessor-version":[{"id":8741,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/4250\/revisions\/8741"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/media\/4156"}],"wp:attachment":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/media?parent=4250"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/categories?post=4250"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/tags?post=4250"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}