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Reliance Money to introduce PMS for the masses

 

Reliance Money would be introducing Portfolio Management Service (PMS) in January 2008, with an entry level investment of only Rs. 5 Lakhs.

 

Reliance Money has announced that it would be introducing its Portfolio Management Service (PMS) in January 2008. In true “Reliance” style, this Portfolio Management Service (PMS) would be targeted at the common man, and therefore, the entry level minimum investment would be only Rs. 5 Lakhs.

It should be noted that although the capital market regulator stipulates the investment in PMS to be a minimum of Rs. 5 Lakhs, traditionally, PMS has been offered to high networth individuals, with a minimum investment limit being in the range of Rs. 75 Lakhs.

It is for the first time that a large brokerage firm is introducing Portfolio Management Service (PMS) at the low threshold of Rs. 5 Lakhs. Till now, PMS with such a low minimum investment was offered only by small brokerages.

With this low threshold, Reliance would be targeting the young professionals.

Reliance is also introducing a unique fee structure for this Portfolio Management Service (PMS). The fee would be totally performance based. There would be no minimum fixed charge. The customers would be charged a fee only if the PMS generates returns for them. Following is the fee structure:

Rate of Fee
Fixed Fee Nil
Returns upto 8% Nil
Returns between 8% and 20% 10% of returns
Returns above 20% 20% of returns

 

The fee structure, where there is only a performance based fee and no minimum annual fee, is an industry first. Traditionally, brokerages offering PMS charge a yearly fixed fee as a percentage of portfolio value, irrespective of the returns generated. This is over and above a performance based fee, which is charged as a percentage of the returns generated.

Reliance would offer three types of investment options – Aggressive (comprising of growth stocks), conservative (large cap stocks) and defensive (blue chip stocks).

Reliance would provide a web based interface for its investors. Using this interface, investors would be able to track their investments real time.

(Please visit Portfolio Management Service (PMS) to read more about PMS in India)

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