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Tata Capital > Blog > Wealth Services > Debt PMS – The New Investment Option Available in the Market

Wealth Services

Debt PMS – The New Investment Option Available in the Market

Debt PMS – The New Investment Option Available in the Market

As an investor, you might always be on the lookout for new and interesting investment options that promise you excellent returns regular income, and carry low risk. One emerging investment avenue in the market is Debt Portfolio Management Service (PMS), an investment solution focusing on optimal capital allocation and risk-adjusted returns.

Debt PMS is a scheme offered by portfolio management companies to manage and optimise debt investments for those individuals or institutions who do not have the time and the expertise to manage their investment portfolios.

In this article, we’ll explore everything about Debt PMS.

Debt portfolio management service (PMS)

Debt PMS is a professional service targeted at high-net-worth individuals who want to invest in the debt market and generate better returns with a well-diversified and managed portfolio. It involves creating a portfolio of debt instruments, such as bonds, debentures, commercial papers and preferred capital, tailored to meet the investor’s specific financial goals, risk tolerance, and investment expectations.

While conventional debt instruments like FDs and debt mutual funds carry low liquidity and / or underwhelming returns, Debt PMS is a fixed-income portfolio management service which aims to invest in debt portfolios and generate risk-adjusted returns and a regular income stream / Capital appreciation for the investor.

It invests in rated and listed securities, which have the potential for higher returns and better liquidity.Depending on the market conditions, PMS can combine Hold-to-Maturity and opportunistic trading strategies.

Why should you consider investing in debt PMS?

Debt portfolio management services offer investors an opportunity to generate capital gains while minimising the risk by investing in the debt market. The investment is made through a professional fund management team with knowledge of the debt market and the technical expertise of interest rate cycles and portfolio management.

Debt PMS relies on an active and flexible investment approach to deliver attractive long-term returns and manage liquidity risk by capitalising on fixed-income investment opportunities. This investment strategy helps manage risk through comprehensive credit analysis, brings diversification, and provides an attractive debt allocation option.

Benefits of debt PMS

1. Professional expertise

Debt PMS offers access to experienced fund managers with expertise in analysing and selecting suitable debt instruments. They follow a flexible investment strategy to bring you regular cash flow or capital appreciation.

2. Customised solutions

Within Debt PMS, portfolio managers tailor investment strategies aligning with your financial goals and risk appetite.

3. Better returns

It offers the potential for better risk-adjusted returns than managing investments independently, as portfolio managers exploit the market trends and opportunities to generate attractive returns.

4. Tax treatment

Income from debt PMS can be classified either as interest income or as capital gain. If it is treated as interest income, the income will be taxed at the marginal rate of taxation.

Meanwhile, in terms of capital gains, STCG on the sale of bonds or NCDs is taxed at the applicable tax rate of the investor, while LTCG on listed bonds or securities is taxed at 10% without indexation.

Who should invest in debt PMS?

Debt PMS is suitable for investors seeking capital preservation and regular income or growth. It is perfect for investors across risk profiles who want to hold a fixed-income portfolio and generate low to high returns. Ideally, both individual and institutional investors like partnership firms, HUFs, sole proprietors, and corporate bodies can invest in Debt PMS.

In the end

PMS offers a range of benefits for investors seeking stability, customisation, growth, and expertise in their investment choices. Kickstart your investment journey with experts at Tata Capital Wealth. Explore suitable investment options, manage your portfolio, and get professional guidance.

Build Your Wealth with Expert Guidance from Tata Capital!

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