The move is likely to pave way for investors with a corpus less of Rs. 25 to invest in mutual funds, believe experts.
Market regulator SEBI on Friday raised the minimum investment amount in portfolio management schemes (PMS) to Rs. 25 +lakh from Rs. 5 lakh earlier. The rule will apply to new investors and fresh investments by existing investors.
Portfolio managers will have to segregate each client’s holding in unlisted securities in separate accounts for new and fresh investments from existing investors. The circular said that existing investments of clients can continue till the maturity of investments.
“Even if the limit is raised to Rs. 25 lakh, it’s not guaranteed that all set of investors irrespective of the ticket size are market savvy. SEBI wants investors to invest in mutual funds if they have less than 25 lakh to invest,” says Hemant Rustagi of Wiseinvest Advisors.
Mutual fund houses run PMS as a separate division. Several brokerage houses also offer PMS services. PMS is not as tightly regulated as compared to mutual funds. In 2008, SEBI disallowed PMS operators to pool assets of investors the way mutual funds do and asked them to keep the assets separately. It also raised the net worth criteria for floating PMS firm to Rs. 2 crore from Rs. 50 lakh earlier.
