The assets under management of PMS has reached Rs.3.56 lakh in September 2016 excluding EPFO and PF contributions, shows the latest SEBI data.
If we include contribution from EPFO and PFs, the overall AUM has reached Rs.11.50 lakh crore as on September. Since we don’t have last year’s data on EPFO and PF contribution in PMS, we have taken the entire figure for comparison.
Portfolio managers have witnessed a healthy growth of 17% i.e. from Rs. 9.84 lakh crore in September 2015 to Rs. 11.50 lakh crore in September 2016.
AUM of portfolio managers as on September 2016
|
Period |
Discretionary Including EPFO |
Non-Discretionary |
Advisory |
Total |
|
September 2016 |
887103 |
69159 |
194081 |
1150343 |
|
September 2015 |
754475 |
53956 |
176210 |
984641 |
|
Difference |
132628 |
15203 |
17871 |
165702 |
|
Change in % |
18% |
28% |
10% |
17% |
Source: SEBI
The growth has come largely on account of growth of assets in non-discretionary and advisory services under PMS.
SEBI data shows that portfolio managers witnessed 28% growth in non-discretionary assets. In non-discretionary PMS, a fund manager cannot execute transactions without the prior permission from investors. Simply put, investors have a say in stock selection. Most banks and national distributors prefer non-discretionary PMS as it provides better transparency and flexibility for investors.
Also, advisory services assets have witnessed a growth of 10% in the last one year. Nearly, Rs. 17,900 crore has been added in the advisory services kitty in just a year. Advisory services under PMS include onshore and offshore advisory services where portfolio managers provide investment advisory services to their clients.
Meanwhile, discretionary assets grew by 18%. A large chunk of discretionary assets comes from EPFO and PFs. Of Rs. 8.87 lakh crore AUM under discretionary PMS, EPFO and PFs have contributed nearly Rs. 7.95 lakh crore. Under discretionary PMS, fund manager has a power of attorney to execute trades on behalf of investors.
Currently 22 AMCs have PMS licenses. Motilal Oswal, Sundaram, Invesco, Birla Sun Life, BNP Paribas MF and Reliance are the ones who are active in PMS space. According to rough industry estimates, domestic AMCs manages 30,000 crore in plain vanilla equity PMS funds. SEBI data shows that AMCs manage Rs. 16,220 crore in PMS through discretionary and non-discretionary routes. The remaining assets come from advisory services.
Compared to mutual funds, PMS gives more flexibility to AMCs. AMCs can charge a higher fee and enjoy a broader investment mandate. For instance, SEBI rules prescribe certain limits on each sector and stock which mutual funds are not permitted to breach. PMS funds do not have any such restrictions. Further, unlike mutual funds, PMS funds are not restricted by any cap on the TER.
Since the minimum investment amount in these funds is Rs. 25 lakh, such products are primarily meant for HNIs.
