Understanding Currency Pairs: Majors, Minors and Exotics
Every forex quote is a relationship between two economies. Learn how pairs are quoted, why the majors dominate liquidity, and what changes when you trade minors and exotics.
Read moreFor investors who want professional management without surrendering visibility over their holdings, a Portfolio Management Service (PMS) occupies a distinctive place. It combines the expertise of a dedicated portfolio manager with a portfolio that is tracked individually for each client, run to an agreed mandate and reported on transparently. This article explains how PMS works, how it compares with pooled investment vehicles, and how to decide whether it suits you.
The core idea
In a PMS, a professional manager makes or recommends investment decisions for a client's portfolio according to a written agreement — the mandate. Unlike a mutual fund, in which investors own units of a shared pool, a PMS portfolio is typically tracked separately for each client. The client can see their capital, results, every transaction and every cost attributable to them.
Because the portfolio is individual, it can be tailored. Constraints on particular assets, currencies or sectors, a specific risk budget or a target level of liquidity can all be written into the mandate — within the limits of the manager's strategy.
The three main models
| Model | Who makes decisions | Suited to |
|---|---|---|
| Discretionary | The portfolio manager executes decisions within the mandate without seeking approval for each transaction | Investors who want full professional management and timely execution |
| Non-discretionary | The manager recommends; the client approves each decision before execution | Investors who want expert input but final control |
| Advisory | The manager advises; the client decides and executes independently | Experienced investors seeking a second, professional opinion |
In fast-moving markets such as foreign exchange, the discretionary model is the most common, because the value of a decision can depend on acting within minutes rather than days.
PMS compared with pooled funds
| Feature | Portfolio Management Service | Pooled fund |
|---|---|---|
| Record-keeping | Capital and results tracked individually for each client | Units in a shared pool |
| Customisation | Mandate can reflect individual constraints | Same portfolio for every investor |
| Transparency | Client-level reporting of capital, income and transactions | Periodic fund-level disclosure |
| Minimum investment | Typically substantially higher | Often accessible at low amounts |
| Fees | Management fee, sometimes with a performance component | Expense ratio charged at fund level |
Regulation varies by jurisdiction. In India, for instance, portfolio managers are regulated by the Securities and Exchange Board of India under the SEBI (Portfolio Managers) Regulations, 2020, which set a minimum investment of ₹50 lakh per client. Other jurisdictions apply their own licensing, suitability and client-asset rules.
How a PMS engagement typically works
1. Discovery and suitability
The process starts with a detailed conversation about objectives, time horizon, income needs, existing assets, experience and — above all — the level of loss the client can tolerate, financially and emotionally.
2. The mandate
The agreed strategy, permitted instruments, risk limits, maximum drawdown thresholds, reporting frequency and fee structure are documented. A clear mandate is the single most important protection for both parties.
3. Implementation and monitoring
The manager builds the portfolio, then monitors positions, exposure and risk continuously, adjusting as conditions change and always within the agreed limits.
4. Reporting and review
Clients receive regular statements showing holdings, transactions, costs and performance. Periodic reviews assess whether the mandate still matches the client's circumstances.
Who a PMS tends to suit
- Time-constrained professionals and business owners who want market exposure but cannot monitor positions throughout the day.
- High-net-worth individuals and families seeking a tailored allocation alongside other assets.
- Investors seeking diversification into strategies — such as professionally managed currency exposure — that are difficult to run personally.
- Those who value transparency and want to see exactly what they own and what they pay.
A PMS is generally not appropriate for money needed in the short term, for capital that cannot withstand losses, or for investors uncomfortable delegating decisions — even within clear limits.
The best mandate is not the one promising the highest return. It is the one that states, precisely, what the manager may do and what they may never do.
Questions to ask before appointing a manager
- What is the firm's regulatory status in my jurisdiction, and can I verify it directly with the regulator?
- How is my capital recorded, and can I see every movement of it at any time?
- What exactly does the strategy do, and in which market conditions is it likely to struggle?
- What are the risk limits — per position, per currency and for the portfolio as a whole?
- How are fees calculated? If there is a performance fee, is it subject to a high-water mark?
- How often will I receive statements, and can I view my account information online in real time?
- What are the terms for adding capital, withdrawing principal, any lock-in period or ending the arrangement?
A partnership with clear boundaries
A well-run portfolio management service is a partnership: the client sets the objectives and limits, and the manager applies professional process and discipline within them. It does not remove market risk, and no reputable manager will guarantee returns. What it offers is structure, expertise, accountability and transparency — qualities that matter most precisely when markets are least predictable.
This article is published by OT PMC Research for general education and information only. It does not constitute investment advice, a recommendation or an offer to buy or sell any financial instrument, and it does not take account of your objectives, financial situation or needs. Figures labelled "illustrative" or "example" are hypothetical.