Mutual funds India industry has seen rapid expansion, but as wealth grows many investors are seeking more customized management than standard schemes allow. The demand for tailored portfolios outside of conventional mutual funds has been spurred, in particular, by the rise in the number of high net worth individuals. By providing personalised strategies and direct equity ownership, Portfolio Management Services (PMS) strive to better connect investing outcomes with personal aspirations.
Customization and Control in PMS
Portfolio management services are distinct from mutual funds in the level of personalization they provide. PMS can build each account as a bespoke portfolio, whereas mutual funds pool money into a standardized scheme. As Anand Rathi notes, a PMS offers investors a โcustom tailored investment experienceโ with portfolios aligned to the clientโs objectives. Providers of PMS emphasize strategies that combine deep market analysis with flexibility. For example, Anand Rathi share and stocks broker highlights that PMS provides professional oversight by experienced managers and โstrategic diversificationโ to help mitigate risk. In addition, PMS portfolios typically hold only 15 to 20 stocks to focus on high-conviction ideas and avoid over-diversification. Direct account access allows clients to evaluate their holdings and performance on a daily basis.
Regulatory Safeguards and Transparency
Regulatory measures have bolstered investor confidence in PMS. SEBI requires all PMS providers to register, meet net worth criteria, and fully disclose fees and risks. Client assets must be held by independent custodians, and managers have a fiduciary duty to act in the investorโs interests. In practice, many PMS firms now offer frequent reporting and open communication. Anand Rathi, for instance, points out that clients can speak with the fund management personnel directly and receive frequent performance updates. By following these measures, PMS offerings become more open and in accordance with best practices.
Industry Growth and Implications
These considerations have led to a major expansion of the PMS sector. PMS assets under management surged from โน7.3 lakh crore in 2014 to over โน32.1 lakh crore by early 2024, according to SEBI data. This expansion reflects changing adviser conduct and has outperformed growth in many mutual fund categories. This growth has been attributed by analysts to structural changes in the market. For example, some advisers moved client allocations towards PMS strategies when SEBI reduced mutual fund distributor commissions in 2015. Following the mutual fund commission cap, market experts saw that PMS became more tempting, further increasing inflows.
Conclusion
In India, portfolio management services have become more essential since they provide wealthy clients with individualised, actively managed portfolios, which mutual funds do not. Together with a more rigorous regulatory framework and transparent digital tools, they respond to a changing investor profile that needs adaptation. These innovations, together with revisions to mutual fund fees, have made PMS an increasingly beneficial addition to the mutual fund market in India. PMS is developing a reputation for itself in the wealth management business as the mutual fund sector in India develops.
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