When one invests in a PMS, the investor own individual securities unlike a mutual fund investor, who owns units of the entire fund. The difference to the investor in a Portfolio Management Services over a Mutual Fund is:

• Concentrated Portfolio.
• Portfolio can be tailored to suit the needs of investor.
• Investors directly own the stocks, rather than the fund owning the stocks.
• Difference in taxation
• Unlike MF, PMS is not required to remain 65%+ invested in equity to get equity taxation benefit. Each Portfolio Management Services account is in the name of investor herself and so the tax treatment is done on an individual investor level.

There are broadly two types of PMS

• Discretionary PMS - Where the investment is at discretion of the fund manager & client has no intervention in the investment process.
• Non-Discretionary PMS - Under this service, the portfolio manager only suggests the investment ideas. The choice as well as the timings of the investment decisions rest solely with the investor. However the execution of the trade is done by the portfolio manager.

Majority of PMS providers in India offer Discretionary Services.