SEBI's new PMS framework could double industry size, says APMI chief
India's portfolio management industry stands poised for significant expansion following SEBI's latest revisions to the Portfolio Management Services (PMS) framework. The introduction of the Portfolio Management Services Investment Route, or PRIM, represents a structural shift in how portfolio managers construct portfolios. According to Vikas Khemani, Chairman of the Association of Portfolio Managers in India, these changes could potentially double the size of the PMS industry over time.
The new framework broadens the investment universe for portfolio managers by allowing them to use direct mutual fund plans, ETFs, index funds and Separately Invested Funds (SIFs) to build customized portfolios, rather than being largely centered around direct securities. A key change is the lowering of the entry point to ₹25 lakh, bringing professional portfolio construction within reach of a broader affluent investor base. This expansion in investment options opens opportunities for mutual fund distributors and independent financial advisors to transition from advisory roles to portfolio management. The framework also enables managers to combine different investment vehicles based on investors' objectives, risk profiles and time horizons.
Khemani believes the combination of direct mutual fund plans, ETFs, index funds and SIFs with customized portfolio management could bring a much wider affluent investor base into the PMS ecosystem. The revised framework also emphasizes global diversification, greater use of derivatives, and focuses on risk-adjusted returns rather than short-term performance metrics.
