Portfolio management services offered by merchant banks are significant because they help institutional investors make investment decisions. These services are designed to assist investors in managing their investment portfolios effectively and achieving their financial goals. Here are the reasons why portfolio management services are crucial for institutional investors:

1. Expertise and Knowledge: Merchant banks specialize in providing investment advice and have a team of experienced professionals who possess extensive knowledge about financial markets, investment products, and risk management strategies. They stay updated with the latest market trends and economic developments to provide valuable insights to their clients.

2. Diversification: Portfolio management services aim to diversify investments across different asset classes, such as stocks, bonds, mutual funds, and alternative investments. By diversifying the portfolio, the risk is spread out, reducing the impact of any individual investment on the overall portfolio performance. Merchant banks help investors identify the right mix of investments based on their risk tolerance, investment objectives, and time horizon.

3. Risk Management: Merchant banks analyze the risk profile of their clients and develop customized investment strategies accordingly. They assess the risk-reward tradeoff of different investment options and help investors make informed decisions. Risk management techniques, such as hedging and asset allocation, are employed to minimize potential losses and protect the portfolio from market downturns.

4. Performance Monitoring: Merchant banks continuously monitor the performance of the portfolio and make necessary adjustments to ensure that it remains aligned with the investor's goals. They conduct regular reviews and provide performance reports to keep investors informed about their investments' progress. If any changes in the market or the investor's circumstances occur, the portfolio is adjusted accordingly.

5. Access to Institutional Investments: Merchant banks have access to a wide range of investment opportunities that may not be readily available to individual investors. They can offer institutional investors access to private equity, venture capital, and other alternative investments that can potentially generate higher returns.

6. Compliance and Regulation: Merchant banks ensure that all investment activities comply with applicable laws and regulations. They have a thorough understanding of regulatory requirements and help institutional investors navigate through the complex investment landscape while adhering to legal and compliance obligations.

In conclusion, portfolio management services offered by merchant banks are significant because they provide institutional investors with expertise, diversification, risk management, performance monitoring, access to institutional investments, and compliance support. These services enable investors to make well-informed investment decisions, achieve their financial objectives, and navigate the complexities of the financial markets effectively.