AIF/PMS industry needs to innovate to compete with New Asset Class, says Gaurab Parija of Bandhan AMC

AIF/PMS industry needs to innovate to compete with New Asset Class, says Gaurab Parija of Bandhan AMC (File photo via @CouncilofFP on X)

Investors are likely to move away from AIFs and PMSs and switch to New Asset Class if the AIF and PMS industry is unable to offer a differentiated range of innovative products, said Gaurab Parija, head of sales and marketing at Bandhan AMC while adding that routine options will not work going ahead.

While speaking at Cafemutual Confluence in Mumbai, he further said that the New Asset Class would be helpful to run tighter portfolios as there would be no limit on exposure to a particular stock or a paper in the portfolio.

Parija also said that the new asset class will attract investments from family offices and corporate entities who were earlier forced to look at alternative assets because the mutual fund structure is very restricted.

On September 30, the Securities and Exchange Board of India (Sebi) gave the final go-ahead for the new asset class. The minimum ticket size for the new asset class is pegged at Rs 10 lakh per investor across all investment strategies.

In July this year, Sebi had released a consultation paper asking industry for feedback to launch a new asset class that would be between a PMS and a mutual fund, to allow investors with a higher investable amount to take more risk.

The new asset class would offer higher returns with greater risk and use strategies like long-short, inverse ETFs, and others.

This new asset class aims to reduce the proliferation of unregistered and unauthorized investment schemes which often promise unrealistic high returns and exploit investors’ expectations for better yields by providing a regulated product, the Sebi consultation paper on the new asset class said.