The Securities and Exchange Board of India (Sebi) has proposed a new category of portfolio management service (PMS) exclusively for mutual funds, called MF-PMS, with a minimum investment threshold of ₹25 lakh. This proposal was announced on July 23 and aims to expand the investment universe for portfolio managers to include unlisted securities, to-be-listed companies, and overseas assets, according to livemint.com.
Under the proposed framework, portfolio managers would be required to register separately for MF-PMS and would manage client money only in direct plans of mutual fund schemes, including exchange-traded funds and specialized investment funds. The minimum investment for MF-PMS is set at ₹25 lakh, which is half the current ₹50 lakh minimum for regular PMS. This move is designed to create a distinct regulatory category for mutual fund-based portfolio management, as detailed by Apoorva Ajith at livemint.com.
The proposal is part of Sebi's broader efforts to enhance the portfolio management ecosystem by widening the scope of permissible investments and lowering entry barriers for investors. By allowing portfolio managers to invest in a wider range of assets, including overseas securities, the regulator aims to provide more diversified options for investors. This regulatory change could influence the PMS market, which currently requires a higher minimum investment and has a narrower investment universe, as reported by livemint.com.
The consultation paper on the MF-PMS framework was issued on July 23, 2026, and Sebi is inviting feedback from stakeholders. The regulator's move to create a mutual fund-only PMS category with a lower investment threshold is expected to impact portfolio management practices and investor participation in the Indian capital markets, according to livemint.com.