SEBI’s Mutual Fund-Only PMS: Simplified Investing in India
By Business Desk
SEBI proposes a new mutual fund-only PMS framework to simplify investments and compliance, reflecting the industry’s rapid growth and AUM surge.
The Securities and Exchange Board of India (SEBI) has proposed a new mutual fund-only Portfolio Management Service (PMS) framework, aiming to broaden investment opportunities and simplify compliance. This initiative seeks to streamline regulations for the evolving portfolio management industry.
SEBI detailed this proposal in a consultation paper released on Thursday, July 24, 2026, initiating a comprehensive review of the existing Portfolio Managers Regulations, 2020. The move reflects the industry’s significant growth and increasing complexity.
The PMS industry has expanded considerably, demonstrating a clear need for regulatory adaptation:
- Assets Under Management (AUM) surged from Rs 18.07 lakh crore in April 2019 to Rs 42.61 lakh crore by May 31, 2026.
- The client base grew from 1.5 lakh to 2.19 lakh during the same period.
- The number of registered portfolio managers more than doubled, increasing from 226 in 2020 to 515 by May 31, 2026.
This expansion, alongside advancements in technology, has prompted a regulatory overhaul. The revision intends to better suit evolving market dynamics, cater to increasingly sophisticated investors, and meet the demand for tailored investment solutions.
Understanding the New MF-PMS Framework
Under the proposed mutual fund-only PMS framework, portfolio managers would exclusively manage client funds through direct plans of mutual fund schemes. This includes direct plans of exchange-traded funds (ETFs) and specialized investment funds.
The distinct MF-PMS registration introduces several key changes to the regulatory landscape:
- Minimum client investment threshold is proposed to decrease from Rs 50 lakh to Rs 25 lakh.
- Minimum net worth requirement for applicants would be lowered from Rs 5 crore to Rs 2 crore.
- A cap on fixed management fees will be introduced, set at a maximum of 2.5% of the client’s AUM.
Existing portfolio managers will also have the option to offer MF-PMS through a separate investment strategy. This distinct registration is expected to streamline operations and reduce barriers to entry for new participants in the market.
Ultimately, the framework aims to modernize the regulatory environment, ensuring it remains responsive to the industry’s growth and the increasing sophistication of investment needs. This strategic review by SEBI signals a proactive approach to fostering a more efficient and accessible portfolio management ecosystem.