SEBI's MF-only PMS push broadens retail access to wealth products

Mumbai: Sebi's proposed move to introduce a separate Mutual Fund-only Portfolio Management Services (MF-PMS) category, which will invest exclusively in direct plans of mutual funds, marks a shift in how wealth will be managed in India.

By lowering entry thresholds and permitting global diversification, the regulator is pushing the industry towards more transparency and fee-based model. For investors, products that were once largely reserved for High Networth Individuals (HNIs) could now become accessible to affluent retail investors.

The regulator has proposed halving the minimum investment requirement for the new category to ₹25 lakh from ₹50 lakh, while also cutting the networth threshold for PMS firms to ₹2 crore from ₹5 crore. These changes lower the entry barriers for both investment managers and investors.


"The number of new players, schemes and categories in both mutual funds and SIFs are increasing, which require active management to optimise returns. Entrusting this to a professional portfolio manager, and the size reduction to ₹25 lakh will give access to many new investors and throw up many opportunities," says Vaibhav Porwal, co-founder, Dezerv.

Under the new framework, PMS will invest in direct MF plans, ETFs, and specialised funds, bypassing distributor commissions. Managers can charge a flat fee of up to 2.5% or adopt profit-sharing models.

This structure could reduce distributor bias against ETFs and passive funds.

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"If pricing remains competitive and execution is seamless, MF-PMS could emerge as an attractive proposition for affluent investors. It could also accelerate the transition towards fee-based wealth management and professional advisory services," says Aditya Agarwal, co-founder of Wealthy.in.