What is a Portfolio? who is a portfolio manager meaning

what is a portfolio manager?

In this article, we will know how you can become a good portfolio manager meaning    A common trader does not have complete information about the share market, so investors need coaxing to put their money in the right place and take wise decisions.

A portfolio manager is an experienced and accomplished professional in this field. He studies the market and adjusts the investment portfolio for his employer continuously to assure the safety of investments and fair returns from them. A 'Portfolio Manager' is a person who directs or advises or acts on behalf of the employer under a contract or arrangement with the employer. whether he is a prudential portfolio manager or otherwise or manager of a portfolio of securities or administration or management of the funds of the employer, as the case may be.


What is a Portfolio?

A prudential portfolio manager means "a person who, under an agreement about portfolio management, exercises or may exercise any degree of his discretion concerning the management or investment of a portfolio of securities or the funds of the employer."

SEBI (Portfolio Management) Rules, 1993 notified by the Central Government in the exercise of the powers conferred by the SEBI Act, 1992 with effect from January 7, 1993. As per Rule 3 [Rule 3] of these Rules, no person shall carry on any activity as a portfolio manager unless he holds a certificate of registration granted by SEBI. A merchant banker acting as a portfolio manager will also be bound by the rules and regulations applicable to a portfolio manager.

Rule 4 provides that a portfolio manager's certificate may be accepted or renewed subject to the following conditions -

(i) In case of any change in its status and constitution, shall obtain prior permission of SEBI to carry out the portfolio.

(ii) he shall pay the amount of fee for renewal of registration, as the case may be, in the manner specified in the regulations.

iii) take adequate steps to redress the grievances of the employers within one month from the date of receipt of the grievance and keep informed from time to time about the number, nature, and other details of the grievances received.

(iv) He shall strictly comply with the rules and regulations made under the Act about the activities being carried out by the portfolio manager. Rule 5 provides that the certificate of registration or renewal thereof shall be valid for 3 years from the date of its issue to the portfolio manager.

what are portfolio management services?


SEBI, in the exercise of the powers conferred by Section 30 of the SEBI Act, 1992, made these Regulations applicable to Portfolio Managers with effect from January 7, 1993.

Regulation 3 provides that an application shall be made by a portfolio manager to SEBI in the prescribed form (Form-A) for the grant of a certificate. Incomplete applications may require the applicant to furnish additional information or clarifications to remove such objections to the applications within a specified time limit in the manner specified by SEBI and the applicant or its principal officer who is responsible for the activities as a portfolio primarily responsible, appear before SEBI for a personal hearing.

what is the Modalities for Registration as Portfolio Managers?

 To get the registration certificate, the applicant has to fulfill the following requirements-

 (i) whether the applicant has the necessary infrastructure; Like- enough office space, equipment, and manpower so that it can carry out its activities effectively?

(ii) whether he has at least two persons in his service who are qualified and experienced in carrying on the business as portfolio managers?

 (iii) whether any person connected directly or indirectly with the applicant has not obtained permission for registration from the Board. On account of the applicant being a body corporate? Here the term 'Person' shall mean the Associates, Subsidiary, or Inter-connected company of the applicant.

(iv) Whether the applicant satisfies the capital adequacy requirement?

(v) Whether the applicant, its partners or directors, or principal officers are involved in any litigation relating to the securities market and which is likely to hurt the business of the applicant?

(vi) whether the applicant or it's director or partner or principal officer has been

Has not been charged with any offense or has been convicted of any economic offense?

(vii) Whether the applicant has any professional qualification in Finance, Law, Accounts, or Business Management from an Institute recognized by the Government? (viii) Whether he is a fit and proper person and whether granting him registration is in the interest of the investors?


(1) Integrity - An investment advisor shall adhere to integrity and high standards in his dealings with his employers and other investment advisors in the conduct of his business.

(2) Employer's Interest - The Investment Adviser shall at all times maintain high standards of service, exercise due diligence and apply professional judgment with due care. The Investment Advisor shall avoid any conflict of interest in its investment decisions and shall ensure fair treatment of all its clients.

(3) Confidentiality - The investment advisor shall not disclose to any employer or to any other person any secret information relating to his employer that has come to his knowledge at the time of dealing. (4) The Agent-Investment Consultant shall take necessary and sufficient steps in the interest of the employer for registering the transfer of securities of the employer and shall arrange for the claim and receipt of accrued dividends, interest, payments, and other rights to the employer.

(5) Obedience to orders - An investment advisor shall obey the orders of his employer. Any amount received by an investment consultant from an employer for the purpose of investment shall be invested as soon as possible and the amount due to an employer shall be paid immediately.

(6) Touring Information - An investment advisor shall not give any description, activity, conduct, or misleading information to the detriment of unfair competition that is harmful to other investment advisors. Such misleading information can also harm the investment advisor himself in the course of competition and dealings.

(7) Proper advice and prompt service - It should always be the endeavor of an investment advisor to carry out all professional dealings promptly and efficiently. Investors should be given time to time non-misleading information and they should be warned of potential hazards before finalizing any investment decision, and should give the best possible advice to the employer through professional astuteness keeping in mind the requirements of the employer. Service should be provided.

(8) Benefit of investors - An investment advisor should not create a false market in securities or indulge in price manipulation and unfair dealing in securities. Brokers, members of the stock exchange, and any intermediary in the capital market should not disclose price-sensitive information or do anything contrary to the interests and benefits of the investors.

      what are the Responsibilities of the Investment Adviser?

The responsibilities of an investment advisor can be explained as follows-

(1) The investment advisor should not create a physical market for securities.

 (2) Should be responsible for making contracts with customers.

 (3) True and reliable information should be provided.

 (4) Investing the employer's money properly.

(5) Should provide adequate returns to the investors.

 (6) The orders of the Reserve Bank should be complied with.

(7) Small investors should create a sense of security of income and wealth.

 (8) Submission of half-yearly reports to the employer is the prime responsibility of the investment advisor.

(9) Dealing in securities should be done within the limits prescribed by the employer.

(10) Keeping proper details regarding interest, dividends, bonus shares, etc. is its important responsibility.

what are the Responsibilities of an Investment Adviser?

The responsibilities of an investment advisor can be explained as follows-

 (1) The investment advisor deals in securities within the limits prescribed by the employer for dealing in securities under the provisions of the Reserve Bank of India Act, 1934. He shall not derive any benefit directly or indirectly from the funds or securities of the employer. He shall not lend or pledge securities held for the employer to third parties without the written permission of the employer.

(2) Investment consultants shall not accept money or securities from their employer for less than one year. The minimum period for which the funds are kept for investment management by the same employer on more than one occasion or on an ongoing basis shall not be less than one year. The renewal of the investment fund on maturity of the initial period shall also be for a minimum period of at least one year. (3) A portfolio advisor shall not disclose to any employer or to the press any secret information about his employer which has come to his knowledge.

(4) Any amount received by a portfolio manager from an employer for investment purposes shall be invested by the portfolio manager for that purpose as soon as possible and the amount due or payable to such employer shall be paid forthwith.

(5) The portfolio advisor shall, so far as it is necessary and in the interest of the employer, take adequate steps to register the transfer of securities of the employer and shall make arrangements for the claim and receipt of accrued dividends, interest payments and other rights of the employer. He will also have to take necessary steps for the conversion of securities and relinquishment of rights as per the orders of the employer.

(6) A portfolio manager shall not make any exaggerated statement, whether written or oral, to his employers, regarding his qualifications or his attainments in respect of various services rendered or in respect of services rendered to other employers.

(7) Every Investment Adviser shall maintain properly the following books of account, records, and forms:

(a) A copy of the profit and loss account, balance sheet, and audit report for each accounting period.

(b) A statement of financial position.

(c) records for each investment transaction that enable it to explain the opinion of an investment decision.

(8) Accounts are required to be maintained by the Investment Adviser separately as per employer. Funds received from the employer, investment and interest, dividend, bonus, or any other benefit received on investments shall be properly accounted for by crediting or debiting the expenses to the account of the employer and the details thereof shall be reflected appropriately in the account of the clients. Deduction of tax at source as required under the Income Tax Act will be booked in the investment account. The books of account shall be audited by a qualified accountant to ensure that the Investment Adviser has followed the proper method of accounting.

9) The investment consultant shall submit to the employer a period as agreed in the contract but this period

Should not exceed 6 months.

10) Every Investment Adviser shall inform SEBI where the books of account, records, and forms are kept. He shall submit to SEBI at the end of each period a copy of the profit and loss account, balance sheet, and such documents as may be required by the rules. He will also submit half-yearly unaudited financial results for an overview of the capital adequacy of the investment advisor as required by SEBI.

Post a Comment