How to select a Portfolio Manager?

Hi there,

As said in the previous lesson,The portfolio manager manages the portfolio on behalf of the client by investing the money in shares and other securities.

You can invest fresh money in Portfolio Management Scheme and the portfolio manager will build a portfolio by deploying that money. Also you can transfer your existing share portfolio to the Portfolio Management Scheme provider. In that case, the portfolio manager will revamp your share portfolio in sync with his investment philosophy and strategy.

Once the Portfolio Management Scheme account is opened, you will be provided with an online access to your portfolio. You can look at where the portfolio manager is investing your money. Also you will be able to generate reports like Portfolio Transaction List, Investment Summary, Performance Analysis, Portfolio Statement and Quarterly capital gain report. As a result, Portfolio Management Scheme relieves you as an investor from all the administrative hassles of investments.

Portfolio Management Scheme Vs Direct Stock Market investment:

You can directly invest in stock market. Then what is the benefit of investing in the stock market through a Portfolio Management Scheme. Investing in share market demands time, knowledge, right mindset, and continuous periodical monitoring. It is really difficult for an individual investor to meet all these demands. But a Portfolio Management Scheme meets these demands at ease. The Portfolio Management Scheme will be managed by a professional expert. It saves a lot of time and effort of the individual investors like you. Hence it is advisable to outsource the stock market investment to a sound Portfolio Management Scheme operator instead of managing it on your own.

Guidelines in choosing the right PM

  • There are all kinds of money managers: good, bad, mediocre, and cheats. Clearly, it’s not worth paying for anything less than the best manager you can find.
  • Look for PMs that are truly unbiased and independent. Advisory companies that have asset management companies as stakeholders may be biased towards their products.
  • Choose an advisory company that offers a holistic approach to investments. There are companies that require their advisors to understand the client’s needs through financial planning before recommending solutions.
  • Regular communication in the form of newsletters, portfolio updates, investment alerts, etc, is a must and this indicates that the company hasn’t forgotten you after you’ve given it business.
  • Look for a company whose representatives are ready to explain product benefits in a jargon-free language, and help you decide what is best for you.
  • Above all, do cross check to ensure that the company you choose to put your trust in has a clean record. The company should be established and should have a good reputation in the market.


The most obvious disadvantage of portfolio management is that the fund manager may make bad investment choices or follow an unsound theory in managing the portfolio. The fees associated with portfolio management are also high. It’s generally a percentage of the annual value of investments. Those who are considering investing in portfolio managers should evaluate carefully. Data from recent decades demonstrates that the majority of portfolio managers failed to perform to expectations.


Trusting a portfolio management advisor is difficult and risky . There are many known cases of churning, where the consultant shifts investment from one fund to another. Some investors restrict this practice by limiting the commission to the consultant depending on his performance; however, if there is a loss, it wouldn’t matter much to them.

You may like these posts:

  1. What is a portfolio? What’s portfolio management?
  2. Indirect way to invest in stocks –Mutual funds.
  3. Investment advisors- An introduction.

Leave a Comment