Enhancing accessibility: PMS industry wants Sebi to lower Rs 50 lakh minimum investment; sees it has key hurdle

The Portfolio Management Services (PMS) industry has approached market regulator SEBI to reduce the minimum investment threshold of ₹50 lakh to make this investment channel accessible to a wider base of investors. Sebi had increased the minimum investment for PMS from Rs 25 lakh to Rs 50 lakh from January 2020. This has been a key hurdle in the growth of the PMS industry in the country.The industry is already facing pressure following the introduction of Specialised Investment Funds (SIFs) from April this year. SIFs offer more sophisticated and flexible investment strategies than mutual funds, yet maintain stronger regulatory safeguards compared to PMS or AIFs. Targeted at high-net-worth individuals and sophisticated investors, SIFs require a minimum investment of ₹10 lakh. In contrast, the minimum threshold for PMS is Rs 50 lakh. The mutual fund industry has a minimum threshold of Rs 500.The Association of Portfolio Managers in India (APMI), the PMS industry body, has therefore requested SEBI to bring down the ticket size of PMS. There are about 470 SEBI-registered PMS providers operating in India managing an estimated Rs 3.8 lakh crore.But the industry is very top heavy, with big players handling the bulk of the AUM. ASK Investment Managers alone manages well over ₹30,000 crore, while others like Marcellus manage around ₹9,511 crore. AUM is a key metric reflecting a firm’s scale and success in attracting and retaining investors..Earlier this month, Sebi Chairman Tuhin Kanta Pandey had said the PMS industry needs to take steps to curb misleading claims by PMS outfits. “Exaggerated performance claims undermine trust and could stall growth of this industry,” he said. Pandey was speaking at the annual conclave of the APMI.He also urged the industry to ensure that clients understand the risk-return trade-offs, the bespoke nature of the mandate, and the advantage of directly owning underlying securities. These benefits may not be matched by pooled products such as mutual funds and SIFs.