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The shift could also change the economics of managing mutual fund portfolios
The Securities and Exchange Board of India’s (SEBI) overhaul of portfolio management services (PMS) could allow investment advisers and wealth managers to move beyond recommending mutual funds to managing customised portfolios, potentially bringing a new set of players into the PMS industry.
Under the new portfolio managers’ route for investing in mutual fund units (PRIM), portfolio managers can manage portfolios comprising direct plans of mutual funds, exchange-traded funds (ETFs), index funds and Specialised Investment Funds (SIFs).
The minimum investment is ₹25 lakh, compared with ₹50 lakh for conventional PMS. Industry participants said the route could be particularly relevant for advisers looking to take responsibility for portfolio construction, allocation and rebalancing.
‘Game-changing’
“This is a game-changing regulation, it expands the role of a portfolio advisor and wealth manager, allowing them to now use the PMS license to offer a full-spectrum portfolio as an Asset Allocator,” said Dharmendra Jain, Co-Founder of Ionic Wealth.
“This expands the portfolio opportunity across IPOs, global investments, unlisted investment-grade debt, and the use of derivatives to manage portfolio risk,” he said.
The shift could also change the economics of managing mutual fund portfolios. Under PRIM, fixed management fees are capped at 1 per cent of client assets under management (AUM), while performance-based fees are permitted. Exposure to schemes of affiliated, group or associate asset management companies is capped at 25 per cent. PRIM-only portfolio managers will require a minimum net worth of ₹2 crore.
“Through PRIM, from ₹25 lakh, a PMS can run a portfolio made entirely of direct plans: mutual funds, ETFs, index funds and SIFs,” said Riddhiman Jain, Managing Director and Head of Investment Strategy and Solutions at Waterfield Advisors.
Lower costs
“For retail investors, that means: Lower costs, with direct plans instead of regular plans; One transparent fee, capped at 1 per cent; A 25 per cent cap on affiliated AMCs, which keeps fund selection honest; Someone accountable for allocation and rebalancing, year after year,” Jain said.
Existing PMS players can also offer PRIM as a separate investment approach, while new applicants can seek registration specifically for the route.
PMS managers can now also participate in IPOs and primary debt issuances, specified overseas investments, including listed equity and debt, REITs, mutual funds, ETFs, index funds and foreign government securities, subject to applicable rules.
“The ability to participate in IPOs and primary debt issuances, invest up to 10 per cent of client AUM in investment-grade unlisted debt with client consent, and access exchange-traded derivatives up to 1.25 times client AUM gives managers greater scope for diversification and portfolio construction,” said Vishal Trehan, Head India Sales and COO – Broking and Clearing, Aikyam Capital Group.
Published on September 27, 2026
