PMS' asset base rises 17% to Rs 25.4 trn in July, shows Sebi data

With investors looking at options beyond the traditional investment routes for higher risk-adjusted returns, assets under management of the portfolio management industry rose nearly 17 per cent in the last one year to Rs 25.4 lakh crore at July-end.

Going ahead, the trend looks positive for the ongoing fiscal year with Portfolio Management Services (PMSs) getting acceptability by a wider customer segment, including retail, industry experts said.

Assets Under Management (AUM) of the portfolio management industry rose to Rs 25.4 lakh crore at the end of July 2022 from Rs 21.77 lakh crore at the end of July last year, translating into a growth of 17 per cent, latest with markets regulator Securities and Exchange Board of India (Sebi) showed.

The asset base was Rs 24.8 lakh crore at the end of June this year.

Of the total AUM, Rs 18.6 lakh crore are contributed by funds from EPFO or PFs.

As of July 2022, there were 1.45 lakh clients in the portfolio management industry, of which 1.36 lakh clients were in the discretionary services category, 6,933 clients in the non-discretionary services category and 1,934 clients availed advisory services of portfolio managers.

The increase in AUM of the PMS industry is in line with the recovery in broad markets and heightened interest from HNIs (High Networth Individuals) and family offices in PMS structures, Abhay Agarwal, Founder, and Fund Manager of Sebi-registered portfolio management service provider Piper Serica, said.

Unlike an Alternative Investment Fund (AIF) and mutual fund, the PMS as a product is highly customisable for the requirement of the investor. Also, it is possible to come up with various fee options that vary from fully fixed fees to fully variable fees, he added.

Moreover, Sebi has made the PMS investments very transparent through its compliance and reporting requirements, which has also increased the confidence of investors.

"PMS has emerged as a product of choice for investors who are looking beyond mutual funds to generate long-term alpha returns," he said.

Anil Rego, Founder and fund manager of Right Horizons Portfolio Management Services, said that India is primarily a domestic demand-driven economy with a young working-age population.

"Given India's underpenetrated financial assets compared to other established and emerging nations, Indian equities bull run in CY2021, services export opportunities, and the domestic demand potential has led the country to emerge as an attractive investment destination leading to significant growth in AUM," Rego said.

The deleveraged corporate sector and a well-capitalised and profitable banking system augur well for Indian businesses, he added.