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The process of managing a person’s investments to optimise their returns within a specific time frame. Additionally, these procedures ensure that investors’ capital is not overly exposed to market risk. Making a wise selection is the foundation of the entire process. For that, portfolio managers were appointed.
Portfolio managers usually take decisions to generate a successful investment mix, allocating resources in accordance with risk and financial objectives and diversifying assets to combat capital erosion.
A portfolio is an investment collection, such as stocks, bonds, cash and cash equivalents, trade funds, closed-end funds, etc. Because managing a portfolio can be difficult and time-consuming, the investor hires a portfolio manager to handle it.
The primary responsibility of a portfolio manager is to manage an investor’s funds in a way that offers the investor the most advantages and a good return on investment. A portfolio manager is an entity legally that manages, advises, and oversees a portfolio on behalf of the client for a fee. Fund managers are another name for portfolio managers.
Before engaging in the requisite activities, the corporate body must register with SEBI as a portfolio manager per SEBI requirements. The SEBI (Portfolio Managers) Regulations contain the requirements.
The contract between the portfolio manager and the investor governs the services of a portfolio manager. The minimum details required by the SEBI Portfolio Manager Regulations should be included in the agreement. However, the Portfolio Manager may include extra conditions in the client agreement. Therefore, it is recommended that an investor carefully study the agreement before signing it.
The non-discretionary portfolio manager shall manage the funds in accordance with the instructions of the client. In contrast, the discretionary portfolio manager shall manage the funds individually and independently in accordance with the needs of each client in a manner that does not partake in the character of a Mutual Fund.
The portfolio manager shall not accept securities or funds less than fifty lakh rupees from the customer. The minimum investment amount per client shall apply to both new clients and fresh investments from existing clients. Further, this minimum investment amount per client shall not apply to an accredited investor and to the Co-investment Portfolio Manager with the appropriate disclosures and in agreed terms.
A qualified fund or portfolio manager shall be required to follow the obligation and responsibilities as mentioned in the regulation. They are as follows:
A portfolio manager is a person who assists investors in choosing the finest investment strategies for future returns that are guaranteed. Let’s go through some of the roles and responsibilities of a portfolio manager:
The following conditions must be met in order for the certificate of registration issued under rule 10 to be valid:
In India, portfolio managers must abide by some regulations that protect investors, promote transparency, and for the efficient functioning of the capital market. In order to maintain compliance with regulatory obligations, portfolio managers must stay updated with the latest regulations and guidelines. Failure to comply with the regulation may end in suspension, penalties or revocation of registration by market regulator SEBI.
Read Our Article: Reporting Requirements of Portfolio Managers
I am a driven and meticulous professional who completed B.Com BL (Hons) from Tamil Nadu Dr. Ambedkar Law University and completed Master of Laws in specialization (Criminal Law with Cyber Crimes). I have extensive experience in Criminal Litigation and want to utilise my legal knowledge in writing also I have proficiency in writing legitimate content with comprehensive research. My core areas of interest are Business Law, Intellectual Property Rights, and Cyber crimes.
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