The last fiscal ended on a positive note for portfolio managers. The assets of PMS, excluding EPFO, reached Rs3.75 lakh crore in FY 2016-17, according to the latest SEBI data.
Since EPFO data is not available with SEBI for FY 2015-16, we could not find the growth percentage over the last one year.
Overall, the AUM of PMS increased from Rs10.45 lakh crore to Rs12.30 lakh crore, i.e., a growth of 18% over a year, if we include the contribution from EPFO.
Experts attribute this growth to the increasing popularity of advisory services under PMS and non-discretionary PMS among HNIs.
“Over the last few years, equity has outperformed other financial assets. This has drawn the attention of many HNIs in structured products like PMS,” says Suresh Soni, CEO of DHFL Pramerica Mutual Fund.
Vinod Jain, of Jain Investments, though, believes low interest rates and wealth managers have had a role to play. “Interest in equity markets has gone up because of low interest rates; individuals want their accounts to be managed actively. And please remember banks and wealth managers have been aggressively advising PMS to their clients for the last one year,” he says.
Other experts point out that after rationalisation of the commission structure in mutual funds; many distributors have started recommending PMS to their clients.
SEBI data shows that assets of advisory services have witnessed a growth of 8% in the last one year. Nearly, Rs14,000 crore has been added in the advisory services kitty in just 12 months. Advisory services under PMS include onshore and offshore advisory services where portfolio managers provide investment advisory services to their clients.
Similarly, portfolio managers witnessed 19% growth in non-discretionary assets. In non-discretionary PMS, a fund manager cannot execute transactions without prior permission from investors. Simply put, investors have a say in stock selection under non-discretionary PMS. Most banks and national distributors prefer this service as it provides better transparency and flexibility to investors.
Discretionary assets grew by 19%. A large part of discretionary assets comes from EPFO and PFs. Of the Rs9.67 lakh crore AUM under discretionary services, EPFO and PFs have contributed nearly Rs8.55 lakh crore, as on March, 2017.
PMS gives more flexibility to AMCs than mutual funds. AMCs can charge a higher fee and enjoy a broader investment mandate. As these products are primarily targeted at HNIs, the minimum investment limit is set at Rs25 lakh.
AUM of portfolio managers as on March, 2017 (in crore Rs)
|
Period |
Discretionary Including EPFO |
Non-Discretionary |
Advisory |
Total |
|
March, 2017 |
9,67,036 |
75,061 |
1,88,385 |
12,30,482 |
|
March, 2016 |
8,11,034 |
60,122 |
1,74,272 |
10,45,428 |
|
Difference |
1,56,002 |
14,939 |
14,113 |
1,65,702 |
|
Change in % |
19% |
25% |
8% |
18% |
Source: SEBI
