BFSI Summit: 'Potential for Indian asset managers to be global players'

At the BFSI Insight Summit 2026, fund managers said SIFs and new PMS rules could widen access to wealth management, supported by rising household wealth and digital distribution

India’s wealth-management industry is rapidly changing as products seek to bridge the gap between conventional mutual funds and portfolio-management services (PMS).

 

Fund managers expect rising household wealth and digital distribution to expand the market.

 

A new PMS category with a minimum investment threshold of ₹25 lakh is expected to widen access, while specialised investment funds (SIFs), after their first year, have attracted ₹36,000 crore-37,000 crore and more than 150,000 folios.

 

“As prosperity increases, investors’ needs evolve. Without new product categories to meet them, the market stagnates,” said Vikas Khemani, founder of Carnelian Asset Management & Advisors, during a panel discussion on high net-worth investing at Business Standard BFSI Insight Summit in Mumbai on Wednesday.

 

 

Khemani said SIFs and PMS should not be seen as taking business from mutual funds or from each other. They can expand the market by addressing distinct needs as family offices and affluent investors build more complex portfolios. Alternative investment funds (AIFs), he said, had similarly created avenues such as private equity and private credit, which had not previously existed at scale.

 

SIFs sit between mutual funds and PMS, with a minimum investment of ₹10 lakh and greater flexibility to use derivatives and options. This allows fund managers to construct different risk-return profiles and add diversification beyond conventional long-only mutual funds.

 

Gaurav Mehta, head of SIF equity, SBI Mutual Fund, said first-year growth was significant despite the category’s small size.

 

As against SIF assets of ₹36,000 crore-37,000 crore, mutual-fund assets are worth ₹82 trillion-83 trillion, with an estimated 250 million-300 million folios.

 

“On the scale of the mutual-fund industry, SIFs are still a fraction. But for a product that has just started, growth has been phenomenal,” Mehta said.

 

He said investors should assess products through risk, return and portfolio diversification. SIFs’ ability to use options more flexibly than conventional mutual funds can help create outcomes less dependent on the broader market performance, although investors need to understand the strategy and its risks.

 

Distribution remains a constraint. Mehta said 11,000-12,000 distributors were equipped to sell SIFs, as against more than 200,000 in the mutual-fund industry. Simplifying certification by the National Institute of Securities Market (NISM) from Series 13 to Series 5G, alongside training by fund houses, is expected to broaden participation.

 

Bhavesh Jain, president and cohead of factor investing at Edelweiss Mutual Fund, said: “SIFs comprised a range of strategies, spanning equity, fixed-income and hybrid products. Early offers largely complement existing products rather than replace them.”

 

One strategy aims to generate returns above an arbitrage fund, while taking somewhat higher risk. Another uses derivatives alongside an equity portfolio to seek benchmark-plus returns. Jain said Edelweiss aimed to deliver 2-3 percentage points above a largecap benchmark through a derivatives overlay, alongside stock selection and sector calls.

 

Nine of the previous 13 months had seen negative market returns, Jain said, making the period unusually challenging for equity investors. But one year was too short to judge a strategy, particularly under abnormal market conditions.

 

Mehta said he would not forecast markets over the next three, six or 12 months, but pointed to improving corporate earnings. For investors, he said, long-term asset allocation should take priority over short-term market calls. Strategic allocation should drive decisions, while tactical adjustments remain a smaller component.

 

Hybrid SIFs could appeal to investors seeking a relatively conservative approach.

 

Khemani said the new PMS framework could help mutual-fund distributors to move from selling products towards active portfolio management. Adoption will depend on investors, distributors and fund managers. New investment categories typically take several years to develop, he said, citing the time AIFs needed to reach meaningful scale.

 

Allowing independent fund managers to use an existing manager’s infrastructure could reduce compliance and operational burdens for smaller teams. Flexibility around derivatives and global investing may also help smaller firms enter the market.

 

PMS growth faces hurdles. Khemani said the category was not intended to become a mass-market product like mutual funds, where investments can start at around ₹1,000. But as the number of high-net-worth individuals and family offices increases in the country the demand for specialised management should rise. A key barrier is taking investors on board. It remains less convenient than mutual funds’ digital process.

 

Technology could help close these gaps. Jain said artificial intelligence was supporting research, idea generation and risk management, especially as derivatives became more prominent in SIFs. Tasks that once took two to three hours can now be completed in minutes, allowing smaller teams to manage larger assets.

 

Khemani also sees potential for Indian asset managers to become global players, with Gujarat International Fin-Tec City eventually serving as a base for emerging-market funds for Indian and international investors.