Structured Products Vs PMS: Which Investment Strategy Suits You?

Investing your money is an important decision. There are many ways to do it. Two such options are structured products and Portfolio Management Services (PMS). But how do you know which one is right for you?

This article explains what these are, how they work, and how to compare them. We’ll also help you understand what to think about before choosing.

Read Also: Understanding the Realities of Options Trading

Contents

• What Are Structured Products and PMS?
  • Structured Products
  • Portfolio Management Services (PMS)
• Main Differences Between PMS and Structured Products
  • Control Over Your Investment
  • Transparency
  • Easy to Exit
  • Minimum Investment Required
  • Use in a Diversified Investment Strategy
• Tax Treatment of PMS vs Structured Products
  • PMS Tax
  • Structured Products Tax
• Understanding the Risks and Returns
• Which is Better: PMS or Structured Products in 2025?
• Investment Strategy for HNIs: PMS vs Structured
• How to Choose Between PMS and Structured Investments
• Conclusion
• FAQs

What Are Structured Products and PMS?

Let’s start with a simple explanation of both.

Structured Products

Structured products are ready-made investment plans. They are built using two parts:

• A fixed return part (like a bond)
• A variable part (like a stock option or derivative)

They are designed by financial companies and are meant to match a certain goal, like keeping your capital safe or earning returns linked to the stock market.

Some may offer a “principal protection” feature, which means your original money is protected (but not always).

Portfolio Management Services (PMS)

PMS is a service where expert managers handle your money. They build a portfolio (a group of investments) based on your goals. You own the shares and bonds directly, but professionals decide for you.

This differs from a mutual fund, where all investors are pooled together.

Main Differences Between PMS and Structured Products

Let’s compare PMS vs structured products using simple points.

1. Control Over Your Investment

• PMS gives you more control. You can see each stock you own.
• The company sets structured products; you cannot change what’s inside.

2. Transparency

• PMS is more open. You get regular updates about your portfolio.
• Structured products are sometimes harder to understand because they have complex parts.

3. Easy to Exit

• PMS allows you to sell your shares when you want (as per market conditions).
• Structured products may have a lock-in period. This means you can’t take your money out early.

4. Minimum Investment Required

• PMS usually needs a minimum of ₹50 lakhs.
• Structured products may require ₹10–25 lakhs or more, depending on the plan.

5. Use in a Diversified Investment Strategy

Both can be part of a diversified investment strategy:

• PMS works well for people looking to grow wealth using stocks.
• Structured products may suit people who want more safety or planned returns.

Tax Treatment of PMS vs Structured Products

PMS Tax

When PMS managers buy and sell shares, you must pay tax on profits:

• If sold in less than 1 year, it’s called short-term capital gains.
• If sold after 1 year, it’s long-term capital gains.

Different tax rates apply to each.

Structured Products Tax

Taxes depend on how the product is made:

• Some are taxed, such as capital gains (when you earn profit).
• Others may be taxed as business income.

Risk Disclaimer: Tax rules may change. Please check the latest rules or speak to a tax expert.

Understanding the Risks and Returns

• PMS invests directly in the stock market. Your money goes up or down with market changes.
• Structured products can have features to protect your capital, but some parts may still be risky.

No method gives guaranteed returns. All have their own risks.

Risk Disclaimer: Investments can go up or down. Always check what’s inside a product before investing.

Which is Better: PMS or Structured Products in 2025?

This depends on your goals and comfort with market ups and downs.

• PMS might be a better fit if you want someone to manage your stocks and make changes as needed.
• Structured products could work if you want a product designed for a fixed goal.

There’s no fixed answer to “Which is better PMS or structured products in 2025”. Think about your needs and how much risk you are okay with.

Read Also: How to Select Stocks for Options Trading?

How to Choose Between PMS and Structured Investments

Ask yourself:

• Do I want my investments to be actively managed?
• Can I handle changes in the stock market?
• Do I want a clear goal-based return?

These questions will help you decide how to choose between PMS and structured investments.

Risk Disclaimer: All investments involve some level of risk. Make sure you know how a product works before investing.

Conclusion

Both structured products and Portfolio Management Services (PMS) offer different benefits. One is more predefined, while the other is actively managed. Your choice depends on your investment goals, risk comfort, and how involved you want to be. Understanding how each works can help you decide what fits best in your financial journey.

Risk Disclaimer: Before choosing any financial product, always understand the risks and terms.

Disclaimer: Investment in the securities market is subject to market risks. Please read all scheme‐related documents carefully before investing. The information provided in this article is for educational and informational purposes only and is not intended as investment advice. Trading in derivatives, including options, involves substantial risk and is not suitable for all investors. Past performance is not indicative of future results. Readers are advised to consult with their financial advisors before making any trading decisions.

FAQs