How PMS and AIF have gained investors and expanded asset base Portfolio Management Services (PMS) and Alternative Investment Funds (AIFs) have become popular investment avenues among high networth individuals (HNIs) looking for sophisticated investment options
July 27, 2022 / 03:43 PM IST
Portfolio Management Services (PMS) and Alternative Investment Funds (AIFs) have become popular investment avenues among high networth individuals (HNIs) looking for sophisticated investment options. The minimum ticket size for investing in a PMS scheme is Rs 50 lakh, while for AIF, it is Rs 1 crore.
The PMS industry had 13.6 million clients at the end of June. PMS is different from mutual funds as all investor flows are not pooled in a single scheme. Instead, investments for each client are held in the clients' individual demat accounts. This also allows PMS solutions to be more customised to client's specific need.
The PMS industry managed Rs 22.7 trillion worth of investor assets at the end of June, shows SEBI data. This includes discretionary and advisory assets. The non-discretionary assets are those where the PMS provider doesn't play an active role in managing the investments. The investment decisions are taken by the client and PMS provider executes them.
There are three different categories of Alternative Investment Funds (AIFs). Category I AIFs invest in start-ups or early stage ventures. These can also be investments in social ventures, SMEs, infrastructure, and sectors which the government or regulators consider socially and economically desirable. Category II AIFs are largely real estate funds, PE funds, funds for distressed assets, etc. Category III AIFs employ complex trading strategies and may even use leverage to maximise returns. These are hedge funds, PIPE funds, etc.
The top-10 PMS strategies account for Rs 59,129 crore of assets, which is just 2 percent of the entire industry's assets put together. There are as many as 375 PMS providers registered with SEBI.