HDFC PMS is an old name and known for its superior service provided to clients looking for portfolio management services.
The company creates an investment portfolio according to the investment objective and risk-bearing capacity of an investor by taking care of the PMS investment risk.
Also, read Why do I need a Portfolio?
With the banking brand to leverage, HDFC PMS is one of the financial services like HDFC Securities by HDFC Bank.
Does HDFC PMS justify the brand name with its propositions? Do they provide value-for-money and dependable services to their clients? Let’s find out all of that in this detailed review.
HDFC PMS Review
HDFC PMS is the portfolio management arm of HDFC Group. The company was established in the year 2000 under the leadership of Mr Anil Kumar Hirjee.
The name of the company comes under the name of the largest PMS players and is also well known for the performance of its strategies.
Let us understand the meaning of Portfolio Management Services first. PMS is a service that helps you to manage your wealth by diversifying the risk.
The company believes in giving long-term benefits to its clients. The PMS house constantly reviews the equity market to give information to the investors in the form of product offerings.
The company provides various products to the investors in order to achieve their investment objectives according to their risk-taking capacity and fund availability.
The company creates an investment portfolio on the basis of following investment philosophy.
- Pick those stocks which are fundamentally strong from the point of view of medium to long-term investment. The research and analysis section of the company is strong enough to select the best stocks for the investment portfolio.
- Continuous market review to provide information related to the same to the investors. It helps the portfolio manager in the shuffling of portfolio stocks to get the best performance.
- A deep comparison from the peers of the company or industry/sector so that the growth prospect of the company can be easily known.
HDFC PMS gives belief to its customers to invest profitably in the equity market. The risk management of the company is too strong that it need not chase the latest trends.
Let’s start our detailed discussion about the different aspects of HDFC PMS from the point of view of a portfolio investor. We will discuss the types of PMS provided, commission model, PMS strategies, investment plans, benefits, customer support etc.
HDFC PMS Types
HDFC PMS provides two types of portfolio management services to their clients. The first one is discretionary PMS and the second one is non-discretionary PMS.
Discretionary PMS: All portfolios related investment decisions are taken on the sole discretion of the portfolio manager. The client can get information about their investment portfolio.
But, that is the portfolio manager who decides the timing of security buying and selling time, selection of stock, the timing of trade execution, etc.
The decision taken by the portfolio manager is the final decision and cannot be questioned except in some special cases.
Non-discretionary PMS: Under this portfolio service, a portfolio manager is liable to execute a trade, adding and removing of security, etc. brought in by the client. The client takes the whole decision related to the investment portfolio and the portfolio manager plays the role of a trader only.
The portfolio manager takes various responsibilities related to the investment portfolio like reshuffling of the portfolio, monitoring and custody of portfolio, managing books, etc. so that the portfolio manager can add these benefits to the investment portfolio of the clients.
HDFC PMS Fund Managers
The Investment manager of a portfolio investment company is the backbone of that company. If the portfolio/fund manager has extensive knowledge and experience in his/her field, the portfolio will provide an excellent return to the investors.
HDFC PMS is also a famous name for its superior portfolio investment return. Mr. Prasant Jain is a popular name in the company that manages the portfolio of investors.
Mr Prasant Jain (Chief investment officer):
Mr Prasant Jain is working as a chief investment officer, Fund manager, and executive director at HDFC Asset management company Ltd. Before this, he served as head of equities.
He also worked with the Zurich Asset Management company as a head of fund management, Chief investment officer from the year 1993-2003. He was also a head-in-charge at SBI Mutual Fund.
Mr Jain has done the Chartered Financial Analyst course from AIMR, PGDM from IIM Banglore, and B. Tech from IIT Kharagpur.
HDFC PMS Strategies Details
HDFC PMS is a big name in the financial market. It provides various types of schemes and strategies which fits the different categories of investors.
Each investor enters into portfolio management service from a different financial objective and also has a different risk-bearing capacity.
HDFC PMS provides a large-cap, Diversified, and small-Midcap strategy.
The objective of these strategies is capital appreciation with the risk profile of medium to large.
Let’s discuss each strategy one by one.
The strategy is created with the aim to capture all the fastest-growing companies of the Indian capital market which has a large cap.
In other words, the aim of the strategy is capital appreciation by investing in Indian growing companies in terms of earnings, ROE, etc. These companies are selected on the basis of growth and reasonable valuation.
The large-cap companies have high risk and high return relationships. So, the strategy is fit for those investors who are ready to invest a high amount in the portfolio management service and has the capacity to bear higher risk also.
The aim of the diversified strategy is to make an investment portfolio through a mix of equity instruments for capital appreciation.
The investment portfolio under this strategy is monitored regularly in order to make necessary changes when requires. The client can also view their investment portfolio with the help of ID & password provided by the company.
The risk profile under this strategy is minimized up to some extent because of its diversified nature. However, the company does not give any assurance that the aim of this strategy will be achieved.
The small-Midcap strategy follows a stock-specific approach with the aim of the medium to long term perspective. The strategy selects the stocks across the sector/industry which have a strong fundamental and a strong future prospect with able management.
In the investment portfolio under this strategy, almost 75% of the portfolio is covered with small and Midcap stocks whose market cap is between ₹200-5000 Cr.
In other words, we can say that the small and Midcap strategy gives a better return than the rest of the two strategies if the stocks are selected with attractive valuation backed with a strong management team.
HDFC PMS Performance
The performance of the investment portfolio of HDFC PMS attracts more and more investors towards the company.
The portfolio of the company is managed by extremely good portfolio managers and research analysts who always try their best to provide an attractive return to investors (read HDFC Securities Research for more information).
The company has been providing superior portfolio management services returns to investors for many years.
With a great rate of return, the company is able to beat the performance of 10 years of Mutual fund.
- HDFC PMS performance for 3 years is about 11%,
- the performance for 5 years is 9%,
- Again the performance of the investment strategy of the company for 7 years is around 12%,
- for 10 years it is approx 15% and
- if we talk about the performance of the portfolio for 11 years plus, it is around 16% CAGR.
This healthy rate of return of HDFC PMS makes it an attractive firm for PMS investors.
HDFC PMS Investment plan
HDFC PMS Investment plan also starts with a minimum investment PMS amount which is mandatory for all PMS houses i.e. ₹25 Lacs. The company provides four different slabs of investment amount under different investment plans that are Bronze, Silver, Gold, and Platinum.
- Bronze (₹25 L to ₹50 L)
- Silver (₹50L to ₹1 Cr.)
- Gold (₹1 Cr to ₹5 Cr)
- Platinum (₹5 Cr & above)
The plan ‘Bronze’ is for the low-profile investors whose risk-bearing capacity is low. They can invest between ₹25 lacs to ₹50 lacs.
The investment plan ‘Silver’ is for those investors who have the capacity to invest a minimum of ₹50 Lacs and a maximum of ₹1 Cr.
The third plan is ‘Gold’ and the range of investment required under this plan is between ₹1 Cr. to ₹5 Cr.
And the last plan provided by the company is ‘Platinum’. And the plan best suits the high-profile investors who have the capacity to invest above ₹5 Cr.
HDFC PMS Commission Model
HDFC PMS has divided the commission model into three categories for the investor’s convenience. The commission model will be opted by the client after a mutual agreement between the client and the portfolio manager.
Each model is created with a different motive and has its own benefits and drawbacks. The Client opts for anyone’s commission model which they think best for them. Here is the name of the model:
- Prepaid commission model
- Volume-based commission model
- Profit-based commission model
Let’s start to discuss each model one by one.
Prepaid commission model
This model best suits you if you are planning to make payment of PMS commission in advance to the portfolio manager. But, you cannot decide it alone, the decision will be taken by both parties.
Under this model, a client opts to pay commission before getting the portfolio management service. A percentage of the total value of the portfolio is needed to pay to the portfolio manager.
The biggest drawback of this model is that a client pays a commission without getting actual service, it may lead to double loss to the client. One is the loss of commission and another is the loss from the portfolio if the portfolio does not perform well.
The benefit of this model is that the percentage of commission is fixed, does not increase with the increase in transaction volume or profit generated.
Volume-based commission model
If you agree to pay the commission on the basis of the total transactions completed by the portfolio manager in a year, then the model best suits you.
Under this model, you will have to pay a certain percentage of the total volume of the transaction as a commission.
The biggest drawback of this model is that in this model a genuine portfolio manager is very important in order to know the right volume of transactions. Because in some cases, the portfolio manager increases the total number of the transaction just to get more commission.
The benefit of this model is that the percentage of the commission charged is lower than other commission models.
Profit-based commission model
One of the best commission models of the company. You will have to pay according to your profit generation out of the portfolio. A fixed percentage is required to pay for a range of profit generation and the percentage of the commission decreases with the increase in realization of profit.
The percentage of commission is higher in this model because the risk involved in the model is very low.
The best part of this model is that you have to pay only after profit realization. If the portfolio goes in loss, you need not pay a commission to the portfolio manager. And the portfolio manager also knows that he will not get a commission if there will be no profit generation. That is why the portfolio manager puts his hundred percent.
The below-mentioned table shows the percentage of the commission as well as the range of amount/volume/profit.
HDFC PMS Charges
The following are the list of PMS charges taken by the HDFC.
Management fee: The fee is charged as per the commission model opted by both parties.
HDFC Securities Brokerage: The brokerage charge is levied on the total transactions completed by the portfolio manager. It is charged in the range of 0.012%-0.022% of the total transaction value.
For more information, you can check out this HDFC Securities Brokerage Calculator as well.
Upfront charge: The charge is most similar to the prepaid value. It is charged in the range of 1.5%-2% of the total transaction value.
Custodian charge: Custodian charge is another charge levied by the company to clients. The charge is in the range of 0.3%-0.4% of the total asset value.
Depository charges: The depository charges are in the range of 0.15%-0.18% of Asset value.
Exit load fee: This fee is charged on the basis of the total withdrawal amount within a year of portfolio creation. The amount will be charged in the range of 1%-2% of the total withdrawal amount.
HDFC PMS Benefits
Following are the benefits of portfolio management services of using HDFC PMS as a portfolio investor:
- HDFC has rich experience of portfolio management so able to provide a superior PMS service to its clients.
- The company has all types of strategies to provide for its clients. The company provides a suitable strategy to each client after going through the risk-bearing capacity and needs analysis of the investor.
- HDFC PMS provides an investment plan and the commission model for providing a variety of options to the clients so that the client can choose a plan according to their need, convenience, and risk-bearing capacity.
- It has a team of experts who works day and night for providing a great return to the investors from their investment portfolio.
- Various types of customer supports are provided by the company so that the investor feels it easy to deal with the company. It helps the client to get an answer to their queries quickly.
HDFC PMS Customer Support
The customer support provided by HDFC PMS is very attractive. All types of necessary supports are provided by the company.
The very first support is the Email and call facility to the investors. They can send their queries through Email and will get a reply through the same very quickly.
A relationship manager is also appointed by the company to solve any type of problem-related to the portfolio management service and to make the relationship strong between both the parties.
A high net-worth client can also call the portfolio manager directly from 3-5 times in a month.
The TAT for issue resolving is a maximum of 8 working days.
HDFC PMS, the name of the PMS house is enough to get the trust of investors. The company is one of the best PMS houses in the country.
The company provides a variety of strategies for the portfolio investment which ultimately helps in providing an excellent and satisfactory return to the investors. Not only this, but the clients are also free to choose an investment plan and the commission model as per their requirement.
So, if you want an excellent portfolio manager to manage your fund, you can stop your search at HDFC PMS to complete your PMS expectations.
In case you are looking to use a reliable and high-performance portfolio management services provider, let us assist you in taking the next steps forward:
HDFC PMS FAQs
Here are some of the most frequently asked questions about HDFC PMS:
What makes HDFC PMS Different from other PMS houses of the country.
The following are the reasons:
- A trusted and well-recognized brand.
- A variety of strategies under the Large-cap, Diversified, and Small-Midcap strategy.
- A team of world-class professionals/experts.
- An excellent return/performance of the portfolio.
What is the objective of HDFC PMS strategies?
Long-term capital appreciation with risk minimization.
Is there any loss involves in the portfolio management service?
Yes, there are chances of loss, including loss of the principal amount also.
More on HDFC Securities
If you wish to learn more about the services of HDFC, here are a few references for you: