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It is not just mutual funds that are growing rapidly. PMS too has witnessed a massive growth in terms of assets.
SEBI data shows that the PMS industry (if we exclude contribution from EPFO) has witnessed 40% growth in AUM. Its AUM went up from over 40% from Rs. 4.75 lakh crore in April 2023 to Rs. 6.70 lakh crore in April 2024.
Among the 4 PMS categories – discretionary, non-discretionary, advisory and co investment, the AUM of discretionary PMS has witnessed the highest growth of 50%. Its AUM grew from Rs. 2.73 lakh crore in April 2023 to Rs. 4 lakh crore in April 2024.
The number of discretionary PMS clients have also increased by almost 30% from 1.22 lakh to 1.58 lakh. Discretionary PMS is like a mutual fund where the fund manager takes the investment call without consulting with clients.
The AUM of non-discretionary PMS where investors have a say on stock picking has also increased by over 30% from Rs. 2.02 lakh crore to Rs. 2.66 lakh crore.
Meanwhile, the AUM of advisory PMS and co-investment PMS has also grown substantially. While the AUM of advisory PMS reached Rs.2.81 lakh crore, co-investment PMS now stood at AUM of Rs.2500 crore in April 2024.
In advisory PMS, the portfolio managers offer advice to institutional clients generally large investors like insurance companies and pension funds. On the other hand, AIF companies runs PMS strategies through co-investment route for their clients if there is some unabsorbed opportunity available.
For instance, if there is Rs.50 crore opportunity in the private market and the AIF fund manager has drawdown of Rs.45 crore, the AIF manager can ask existing clients to participate in this opportunity by contributing Rs.5 crore. The AIF company will manage Rs.5 crore as co-investment PMS with a separate fee.
Overall, if we include EPFO, the AUM of PMS has increased from Rs. 27.74 lakh crore in April 2023 to Rs. 33.65 lakh crore in April 2024.
Let us look at the table to know more.
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PMS AUM - April 2023 |
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|
Discretionary |
Non-discretionary |
Co-investment |
Advisory |
Total |
|
23,49,913 |
2,14,795 |
129 |
2,08,984 |
2773822 |
|
PMS AUM - April 2024 |
||||
|
Discretionary |
Non-discretionary |
Co-investment |
Advisory |
Total |
|
28,00,114 |
2,80,794 |
2,453 |
2,81,371 |
33,64,732 |
|
Non-EPFO PMS AUM - April 2023 |
||
|
Discretionary |
Non-discretionary |
Total |
|
2,72,724 |
2,02,338 |
4,75,062 |
|
Non-EPFO PMS AUM - April 2024 |
||
|
Discretionary |
Non-discretionary |
Total |
|
4,02,756 |
2,65,862 |
6,68,818 |
Daniel GM, Founder, PMSBazaar, attributes the growth in PMS AUM to the stellar performance of equity markets. He said that many HNIs and ultra HNIs have been showing interests in discretionary PMS due to healthy past performance of most strategies.
Vijay Choudhary, Director, Renaissance Investment believes that many mid size MFDs have started looking at PMS seriously. “Many MFDs are now recommending PMS to their wealthy clients. PMS offers exposure to innovative strategies that are much more flexible than mutual funds.”
Deepak Jaggi, Co-founder and MD, Satco Wealth believes that PMS offers exposure to concentrated portfolio. He said, “HNIs are investing more in thematic PMS strategies with concentrated portfolios. Also, as HNIs get access to the fund managers in PMS schemes, they feel more comfortable investing in them.”
He also pointed to the premiumization of products among HNIs where they are moving from mutual funds to PMS for better returns.
