HNIs chase alpha via portfolio managers; discretionary PMS clients hit 200K

Discretionary PMS clients cross 200K; assets soar past ₹40 trillion

Relatively well-off investors are increasingly turning to professional portfolio management service (PMS) providers in search of better market returns.

 

A PMS provider manages or advises on client portfolios for a fee. All PMS schemes require a minimum investment of ₹50 lakh, compared to as little as ₹500 for mutual funds (MFs). Discretionary PMS schemes — where the fund manager takes all buy-and-sell decisions — remain the most popular. The number of clients under discretionary PMS schemes crossed 200,000 in September 2025, the highest since records began in December 2010, when there were 67,417 such clients.

 

The Securities and Exchange Board of India (Sebi) issued a circular on October 24, 2025, outlining a framework for consolidation within the PMS industry through the transfer of business from one manager to another. The framework allows the transfer of either entire businesses or parts of them.

 

“As an initiative towards ease of doing business and for the purpose of simplification, it has been decided to allow transfer of PMS business,” Sebi said in the circular.

 

The norms apply to consolidation within the same group as well as between unrelated portfolio managers. 

 

These moves come amid record assets under management for the industry, driven by investors looking for newer, more personalised products compared to broad-based options like MFs.

 

Many high networth individual clients seek variety in their investments, said financial planner Jayant Vidwans. The largely rangebound market over the past year has also pushed investors to look for products that can deliver above-average returns during periods of limited gains.

 

Despite underperformance in some PMS schemes, the momentum is unlikely to slow, according to Vidwans.

 

Funds managed by PMS providers reached an all-time high of ₹40.3 trillion in September 2025, up from ₹3.6 trillion in December 2010. However, that headline figure includes investments from the Employees’ Provident Fund Organisation and similar institutions. Excluding these, core assets stood at ₹11.9 trillion as of September 2025 — more than double the ₹4.5 trillion seen in September 2019, before the pandemic-era market boom.

 

“Even in the US, there has always been a co-existence of multiple money managers. People want more solutions for their wealth management,” said Dhiraj Sachdev, chief investment officer at Roha Venture.

 

Sachdev said PMS fees are often negotiable depending on investment size — unlike MFs — and that clients typically have direct interaction with fund managers, allowing for greater customisation. PMS strategies also tend to focus on mid and smallcap companies, which require a different approach than largecap-focused names.

 

All of this creates a niche for PMS products, which should grow at a double-digit pace over the next decade or more, Sachdev added.