Earlier in the year, SEBI had doubled the minimum investment amount from Rs.25 lakh to Rs.50 lakh. We spoke to a few PMS distributors and asset managers to understand the implication of this move.
Delhi IFA, Shobhit Gupta of Moneygain Consultants said that distributors are likely to opt for other financial products. “Wealthy investors would prefer investing in AIFs where minimum ticket size is Rs.1 crore. In AIFs, investors can commit Rs.1 crore but invest in tranches. It becomes easier for them to divide their investible corpus in 4-5 parts. However, they may not be comfortable committing Rs.50 lakh in one go.”
Another factor that will hamper growth of PMS industry is lacklustre performance of PMS. He said, “Since many PMS have not performed well in the past few years, it will be difficult for distributors to convince clients.”
Chandigarh IFA Iqbal Singh of Innovative Financial Management said that investors may not want to lock in such a huge amount in PMS. “Instead of locking Rs.50 lakh in one scheme, the client may like to divide it across multiple products having similar strategy like mutual funds”
Vishal Kapoor, CEO, IDFC MF said that distributors will now have to target ultra HNIs to distribute PMS. He said, “Distributors will have to target high end investors with high liquid net worth and risk appetite. In addition, growth might not be affected as PMS space is very under penetrated.”
Currently, there are over 300 portfolio managers in the industry.