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How to become a Portfolio Manager in India?

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Who is a portfolio manager?

A portfolio manager advises or undertakes on behalf of his client to manage a portfolio of securities or the funds of the client. There are two types of portfolio managers. First is a portfolio manager who individually and independently manages the funds of each client in accordance with the needs of the client. The other type is a portfolio manager who manages the funds in accordance with the directions of the client.

 

Age requirement of a portfolio manager-

There is no age limit specified by SEBI as such.

 

Academic requirements of a portfolio manager-

The applicant should possess a minimum undergraduate degree in commerce, finance or economics

But if a person wants to increase his chances of becoming a portfolio manager then he/she should hold an MBA degree in finance.

 

Steps to be followed-

  1. The first process for an applicant for registration as a portfolio manager is to pay a nonrefundable application fee of Rs 1 lakh to the Securities and Exchange Board of India (SEBI).
  2. Also every portfolio manager is required to pay a sum of Rs 10 lakhs as registration fees at the time of grant of certificate of registration by SEBI.
  3. There are a few obligations that the applicant needs to fulfill in order to become a portfolio manager. According to SEBI, the applicant must have the following necessary infrastructure-
    1. Adequate office space
    2. Necessary equipment
    3. Manpower
  4. In his/her manpower, the applicant should have a minimum of two persons who, between them, have at least five years of experience as portfolio managers , stock brokers, investment managers, or in areas related to fund management.
  5. The portfolio manager is required to have a minimum net worth of Rs 50 lakhs.
  6. The certificate of registration by SEBI remains valid for three years.

 

 

Rules and regulations-

  1. The portfolio manager, before taking up an assignment of management of funds or portfolio of securities on behalf of the client, must enter into an agreement in writing with the client. It should clearly define the relationship and set out their mutual rights, liabilities and obligations relating to the management of funds.
  2. A portfolio manager is permitted to invest in derivatives, including transactions for the purpose of hedging and portfolio rebalancing, through a recognized stock exchange.

 

  1. Leveraging of the portfolio is not permitted in respect of investment in derivatives. The total exposure of the client in derivatives should not exceed his portfolio funds placed with the portfolio manager.
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