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SEBI proposes mutual-fund-only PMS with lower ₹25 lakh minimum
The regulator also suggests cutting fixed portfolio management fees to a capped 2.5% of client AUM and reducing the net worth requirement for applicants to ₹2 crore.
The Securities and Exchange Board of India has proposed a regulatory revamp that would create a mutual fund-only portfolio management service, or MF-PMS, and broaden what portfolio managers can invest in, according to a consultation paper discussed by LiveMint Markets. Under the proposal, MF-PMS would let portfolio managers manage client money exclusively in direct plans of mutual fund schemes, including exchange-traded funds and specialized investment funds, using a separate MF-PMS registration. The framework is also designed to expand the investment universe to include to-be-listed and unlisted securities, as well as overseas assets. Sebi is seeking to make the service more accessible by lowering the minimum investment threshold to ₹25 lakh from ₹50 lakh for regular PMS, and reducing the minimum net worth requirement to ₹2 crore from ₹5 crore. It also proposes a cap on fixed management fees at 2.5% of a client’s assets under management. The regulator would allow performance-linked fees or a combination of fixed and performance fees only with explicit client consent, and it is proposing safeguards to avoid conflicts of interest, including arm’s-length segregation between distribution and portfolio management for mutual fund distributors and a ban on the same client receiving both services from the same entity. LiveMint Markets noted that the PMS asset base has grown rapidly, with industry AUM more than doubling to ₹42.61 trillion as of May 2026 from 2019, alongside a rise in clients to 219,000 from 150,000.