PMS schemes - at the first sight look good. But before one goes into investing in PMS - they should do the following :
1/ Try and negotiate the management fee. There are PMS houses which agree to charge you on the basis of returns. Most PMS schemes, even today, charge you upfront , even if the PMS does not give positive returns. In some cases, the PMS may return positive but for the charges - if becomes net negative. 2/ Try and negotiate for an exit, if the PMS does not perform x% in a well define term (let us say 10% in the first year). This exit should be completely without a load. Generally, the PMS will load upto 3% for the first year, 2% for the second and 1% for the third year and nil from there on. PMS Manager - should be ready to sign an exit clause if the PMS does not perform to the agreed level - irrespective of the markets. 3/ Link the charges to the returns of the PMS vis-a-vis the markets. 4/ Absolutely imp - not to pay a single paisa as entry load.
PMS schemes normal charge upto 2.5% of AUM. With an investment of 50 Lacs - this is line 1.25 Lacs per annum, We have to be judiciously spending this money.
PMS schemes - at the first sight look good. But before one goes into investing in PMS - they should do the following :
1/ Try and negotiate the management fee. There are PMS houses which agree to charge you on the basis of returns. Most PMS schemes, even today, charge you upfront , even if the PMS does not give positive returns. In some cases, the PMS may return positive but for the charges - if becomes net negative. 2/ Try and negotiate for an exit, if the PMS does not perform x% in a well define term (let us say 10% in the first year). This exit should be completely without a load. Generally, the PMS will load upto 3% for the first year, 2% for the second and 1% for the third year and nil from there on. PMS Manager - should be ready to sign an exit clause if the PMS does not perform to the agreed level - irrespective of the markets. 3/ Link the charges to the returns of the PMS vis-a-vis the markets. 4/ Absolutely imp - not to pay a single paisa as entry load.
PMS schemes normal charge upto 2.5% of AUM. With an investment of 50 Lacs - this is line 1.25 Lacs per annum, We have to be judiciously spending this money.
