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Portfolio Management ServiceS


A Portfolio Manager is 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 Portfolio Manager is required to be registered with SEBI (Portfolio Managers) Regulations, 1993 ('Portfolio Managers Regulations').

SEBI defines as below:

The discretionary Portfolio Manager means a Portfolio Manager who exercises or may, under a contract relating to Portfolio Management, exercise any degree of discretion as to the investments or management of the portfolio of securities or the funds of the client, as the case may be.

Essentially,

The discretionary Portfolio Manager individually and independently manages the funds of each client in accordance with the needs of the client.

The non-discretionary Portfolio Manager manages the funds in accordance with the directions of the client.

Any individual including NRI, Proprietorship, Hindu Undivided Family (HUF), Partnership Firm, Limited Liability Partnership(LLP), Association of Person, Body Corporate, Trust and Statutory Authority.

Yes. The Portfolio Manager, before taking up an assignment of management of funds or portfolio of securities on behalf of the client, enters into an agreement in writing with the client, clearly defining the inter se relationship and setting out their mutual rights, liabilities and obligations relating to the management of funds or portfolio of securities of the client.

Portfolio Managers Regulations have not prescribed any scale of fee to be charged by the Portfolio Manager to its clients.

However, the Regulations provide that the Portfolio Manager shall charge a fee as per the agreement with the client for rendering Portfolio Management Services. The fee so charged may be a fixed amount or a return based fee or a combination of both. In addition, actual expenses like custodian expenses, audit fee, brokerage on transactions, etc. are charged on actuals. For charging performance-based fee, the concept of high watermark is typically applicable.

The Portfolio Manager is required to accept a minimum of Rs.25 lakhs in cheque or securities of an equivalent valuation (based on valuation done by Portfolio Manager) while opening the account for the purpose of rendering Portfolio Management Service to the client. Portfolio Manager may only invest and not borrow on behalf of his clients.

In discretionary Portfolio Management Service, the discretion to invest primarily lies with the Portfolio Manager. However at the time of signing the agreement, investor can provide the list of securities, sectors, etc. which he/ she/ it does not/cannot invest in portfolio due to reasons like conflict of interests, religious beliefs etc.

A request letter is also sought from the client that clearly states the securities that should not be dealt in. These details are updated in the system, which then automatically refrains from dealing in the specified securities.

Yes. For investment in securities, an investor is required to open a demat account in his/her own name.

The Portfolio Manager periodically provides the below reports to their clients, as agreed in the contract, but not exceeding a period of six months and as and when required by the client and such report shall contain the following details, namely:-

(a) the composition and the value of the portfolio, description of security, number of securities, value of each security held in the portfolio, cash balance and aggregate value of the portfolio as on the date of report;

(b) transactions undertaken during the period of report including date of transaction and details of purchases and sales;

(c) beneficial interest received during that period in respect of interest, dividend, bonus shares, rights shares and debentures;

(d) expenses incurred in managing the portfolio of the client;

(e) details of risk foreseen by the Portfolio Manager and the risk relating to the securities recommended by the Portfolio Manager for investment or disinvestment.

(f) Audited reports certified by a Chartered Accountant will be sent to client annually after an audit for the Financial Year is completed.

These reports will be available on the website with restricted access to each client.

As required under Regulation 14 of Portfolio Managers Regulations, the purpose of the Disclosure Document is to provide essential information about the Portfolio Management Services ('PMS') in a manner to assist and enable the investors in taking informed decisions for engaging a Portfolio Manager.

The Disclosure Document contains the information about the Portfolio Manager, Portfolio/ Product, Risk disclosure, fees, related parties disclosures, performance of the Portfolios/ Products and the financial statements of the Portfolio Manager for the immediately preceding three years.

The Portfolio Manager provides to the client the Disclosure Document at least two days prior to entering into an agreement with the client.

The services of a Portfolio Manager are governed by Portfolio Managers Regulations and by the agreement between the Portfolio Manager and the investor. The agreement should cover the minimum details as specified in the Portfolio Manager Regulations. However, additional requirements can be specified by the Portfolio Manager in the agreement with the client. Hence, an investor is advised to read the agreement carefully before signing it.

The client is allowed to withdraw in full/partial before the completion of 3 years, however an exit fee will be applicable on such withdrawals. Further, in case, the client makes full/ partial withdrawal anytime before the end of 3rd year of the client anniversary, the performance fees (as applicable) will be calculated proportionately and charged on the date of partial/full withdrawal.

Partial withdrawal shall be allowed only if the Portfolio Value is above the minimum threshold (25 lakhs) after the withdrawal and Partial withdrawal can be only in form of funds (not in form of securities).

Portfolio Managers cannot impose a lock-in on the investment of their clients. However, a Portfolio Manager can charge exit fees from the client for early exit, as laid down in the agreement.

Portfolio Manager cannot offer/ promise indicative or guaranteed returns to clients.

Investors can log on to the website of SEBI (www.sebi.gov.in) for information on SEBI regulations and circulars pertaining to Portfolio Managers. Investor can further approach respective SEBI registered Portfolio Managers for any service related queries.

Investors would find in the Disclosure Document the name, address and telephone number of the investor relation officer of the Portfolio Manager who attends to the investor queries and complaints. The grievance redressal and dispute mechanism is also mentioned in the Disclosure Document. Investors can approach SEBI for redressal of their complaints. On receipt of complaints, SEBI takes up the matter with the concerned Portfolio Manager and follows up with them.

Yes, NRIs can invest in a PMS. NRIs will have to open a PIS (Portfolio Investment Scheme) Account in accordance with RBI guidelines in order to invest in the PMS scheme.

Yes, it is mandatory. It is a scheme of the Reserve Bank of India that enables NRIs and OCBs to purchase and sell shares and convertible debentures of Indian companies on a recognized stock exchange by routing such purchase/sale transactions through their NRI Savings Account with a designated bank branch.

A new Demat and trading account is opened in client's name and then it is professionally managed by our PMS Portfolio Manager. PMS Portfolio Fund manager will have a specific POA (Power of Attorney) to manage this account.

Stocks will be in the name of investor and will be held in his Demat account opened exclusively for Portfolio Management Services.

The client will be provided a login access and password where he can view all the relevant details regarding his portfolio.

Yes, the client can transfer existing shares to the new PMS account with Axis AMC subject to Fund Manager's prior approval. These securities will need to be liquidated.

Axis AMC will derive a valuation of the securities at the time of application. The net proceeds from this liquidation amount should be Rs.25 lakhs or more. Notwithstanding, the client may be asked to provide the balance amount in order to fulfil the minimum investment criteria. An investor can also open a PMS account with a combination of cash and stocks.

Yes. The client will get a quarterly statement of fees and expenses. He may also access the previous bills through the login access provided, at any point of time.

Client can give additional investment request by signing the transaction Slip. (Need to be signed by all the holders). Minimum amount will be as per the term sheet signed at the time of opening PMS account of the respective portfolios and SEBI (PMS) Regulations.

In view of the individual nature of the implications, each investor is advised to consult with his or her own tax advisors/authorised dealers with respect to the specific tax and other implications arising out of his or her participation through the Portfolio Management Services.

No. Axis AMC does not accept third party payments.

SEBI guidelines forbid any intra-day trading activity by Portfolio Managers. Axis AMC shall strictly adhere to the applicable regulations whilst making investments.

Axis AMC and investor will sign an agreement; Axis AMC facilitates the opening of demat for the investor with the Custodians, in our case with Axis Bank Limited. Once the demat account is opened, the client can

a) issue a cheque for his investment

b) transfer securities from his existing demat account to the Axis Bank demat account

c) Combination of cash transfer and securities transfer.

No. The investor is required to open a fresh demat account with Axis Bank Ltd through Axis AMC.


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