Portfolio management services (PMS) are a service in which a professional manager invests a client's money in shares and bonds, in a portfolio run for that client alone. In India, PMS is regulated by SEBI, and the minimum investment is ₹50 lakh. A shared family office, also called a fractional family office, offers similar services to several clients at once, so each pays only part of the cost.
Both serve the same group of people: professionals and founders whose wealth has grown quickly, but who are not rich enough for a private bank to give them full attention.
Consider a doctor in Hyderabad who invests ₹1 crore through a PMS. The manager buys about 25 shares and some index funds and ETFs for her. The shares are held in her own demat account, at a depository, not in a pooled fund. So she can see each share she owns. The manager may buy and sell without asking her first. This is called a discretionary PMS. In a non-discretionary PMS, the manager must ask her before each trade.
The manager charges a yearly fee, often with an extra share of the profit above a set level. Every month, the doctor receives a report. The PMS also sends her holdings to wealth aggregation software, and the reports to her adviser's wealth management platform, if she has an adviser.
A fractional family office goes further. It looks after a client's whole financial life: investments, taxes, insurance and property.
How is a PMS different from a mutual fund? A mutual fund pools the money of many investors, and each investor owns units of the fund. In a PMS, the client owns the shares directly, and the portfolio can be shaped for that one client. Many smaller investors buy mutual funds through a distributor, who tracks them on mutual fund distributor software. The page on investment advice regulation explains how SEBI separates managing, advising and selling.