Wealth · PMS & AIF
PMS & AIF: advanced investment solutions
Portfolio Management Services (PMS) and Alternative Investment Funds (AIFs) — sophisticated avenues for high-net-worth and institutional investors seeking tailored strategies and potentially higher returns beyond traditional products.
Bespoke portfolios
What are Portfolio Management Services (PMS)?
PMS offers professional management of your individual portfolio. Unlike mutual funds — where money is pooled into a common portfolio — in PMS you own the individual securities directly, and a dedicated manager runs your portfolio to your goals, risk appetite and horizon.
Personalised approach
Portfolios are customised to meet each investor’s individual needs.
Direct ownership
You hold the securities directly in your own Demat account.
Discretionary vs non-discretionary
Discretionary — the manager decides on your behalf. Non-discretionary — the manager advises, but you keep the final call.
Higher minimum
Generally a minimum investment of ₹50 lakh, per SEBI regulations.
Private pooled funds
What are Alternative Investment Funds (AIFs)?
AIFs are privately pooled vehicles that collect funds from sophisticated investors — Indian or foreign — to invest per a defined policy, typically in assets beyond conventional stocks, bonds and mutual funds. They are regulated by SEBI.
Who can invest in AIFs?
High-net-worth individuals
Typically a minimum investment of ₹1 crore, suited to wealthy individuals.
Institutional investors
Banks, pension funds, family offices and similar institutions.
Foreign investors
Certain AIF categories are open to non-residents, subject to regulatory conditions.
Accredited investors
SEBI-recognised individuals or entities with high financial strength and expertise.
The case
Why consider PMS / AIFs?
Potentially higher returns
Specialised strategies and active management aim to generate alpha or superior absolute returns.
Diversification
Access to asset classes and strategies not available through public markets or traditional funds.
Active, specialised management
Run by highly experienced professionals with deep expertise in specific asset classes.
Customisation (PMS)
A high degree of personalisation, closely aligning investments with your goals and risk tolerance.
Access to private markets (AIFs)
Doors to private equity, venture capital, real estate and other private opportunities.
Tax efficiency
Certain AIF structures may offer tax advantages, depending on category and investment type.
Vocabulary
Key concepts in PMS / AIF investing
- Investment ManagerThe entity responsible for managing the PMS portfolio or AIF fund.
- Sponsor / Manager (AIF)The entity that establishes and manages the AIF.
- CustodySafekeeping of securities, typically with a separate custodian.
- Hurdle RateThe minimum return a fund must achieve before the manager earns carried interest.
- High Water MarkEnsures performance fees are earned only on new profits, not on recovering past losses.
- Performance FeesFees charged on profits generated above a certain threshold.
- Management FeesAnnual fees as a percentage of assets under management (AUM).
- Drawdown (AIF)When the manager calls committed capital from investors as needed for investments.
- Distribution (AIF)When profits or capital are returned to investors from the AIF.
Know the risks
Risks associated with PMS / AIF investing
High investment thresholds
The high minimums make these inaccessible to most retail investors.
Illiquidity
Many AIFs (private equity, real estate) have long lock-ins; PMS is also built for long-term holding.
Market & credit risk
All investments face market swings, plus the risk of default by underlying entities.
Manager risk
Performance depends heavily on the skill and expertise of the manager.
Complexity
Strategies can be complex and less transparent than traditional investments.
High fees & regulation
Management and performance fees can be substantial, and SEBI rule changes can affect operations and returns.
Your roadmap
How to get started with PMS / AIFs in India
Assess eligibility
Ensure you meet the minimums — ₹50 lakh for PMS, ₹1 crore for most AIFs.
Define goals & risk appetite
Clearly articulate your objectives, horizon and comfort with risk.
Thorough due diligence
- Research managers — track record, philosophy, team expertise and compliance.
- Understand the strategy — underlying assets and fee structure.
- Review offer documents — the PPM (AIFs) or the Disclosure Document (PMS).
Consult a financial advisor
Engage a qualified advisor specialising in alternatives to navigate the complexity.
Complete documentation
Detailed KYC, agreement signing, and funding the investment.
Is PMS / AIF right for you?
Tailored strategies for sophisticated investors
PMS and AIFs are powerful tools for portfolio enhancement — best suited to investors with a long horizon, high risk tolerance and significant capital. Careful consideration and professional guidance are paramount. Talk to our wealth team.