SEBI has drafted a proposal for a new Mutual Fund‑only Portfolio Management Service (MF‑PMS). The plan would let investors start a professionally managed portfolio with a minimum of Rs 25 lakh, half the current Rs 50 lakh requirement for traditional PMS.
Under the MF‑PMS framework, portfolio managers would invest only in direct plans of mutual funds, ETFs and Specialised Investment Funds (SIFs). This means investors can receive a customised asset allocation without any direct stock picking.
The regulator says the changes will simplify the regulatory environment. It proposes a separate registration process for MF‑PMS providers, lighter compliance rules and lower net‑worth thresholds for firms that operate solely in this segment.
A. Balasubramanian, MD & CEO of Aditya Birla Sun Life AMC, welcomed the proposal. He called it a long‑awaited reform that will give Registered Investment Advisers (RIAs) new ways to offer portfolio management services.
The new rules are expected to broaden choices for investors. They can now pick between an RIA or a distributor, and an RIA with the proper licence can offer PMS‑style services using only mutual funds.
Some market participants worry about extra charges. SEBI’s paper caps the fixed management fee at 2.5 % of assets under management and requires explicit client consent for performance‑based fees. It also exempts MF‑PMS from existing PMS exit‑load rules to avoid double charging.
The proposal is still open for public comment. SEBI will review industry feedback and may refine the provisions before final notification. The industry expects the framework to evolve as the consultation process continues.