The first quarter of FY 2017-18 has been quite positive for portfolio managers. The assets of PMS, excluding EPFO, reached Rs.3.87 lakh crore in June 17. It increased by Rs.12,000 crore from Rs.3.75 lakh crore in March 2017, according to the latest SEBI data.
Overall, the AUM of PMS increased from Rs.12.30 lakh crore to Rs.12.83 lakh crore, i.e., a growth of 4% over the quarter, if we include the contribution from EPFO.
This growth is mainly due to an increase in assets under discretionary services. AUM under discretionary services excluding EPFO increased from Rs.1.12 lakh crore in March 2017 to Rs.1.27 lakh crore in June 2017, an increase of 15,000 crore in three months. Overall, the category added Rs.56,380 crore to Rs.10 lakh crore. Contribution from EPFO included a major chunk of the discretionary services. The contribution from EPFO increased from Rs.8.55 lakh crore in March to Rs.8.96 lakh crore in June.
Similarly, portfolio managers witnessed 2% growth in non-discretionary assets. In non-discretionary PMS, investors have a say in stock selection. Most banks and national distributors prefer this service as it provides transparency and greater freedom to investors.
Experts attribute this growth to the increasing popularity of advisory services under PMS and non-discretionary PMS among HNIs. Mumbai-based advisor Vinod Jain of Jain Investments said, “Once investors have invested adequately in mutual funds, we then advise our clients to go for PMS. Also, foreign banks and wealth managers have been aggressively promoting PMS to their clients,” 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.
However, unlike other two categories, SEBI data shows that assets of advisory services PMS have witnessed a decrease of 3% last quarter. The category witnessed a decline of nearly Rs.5,213 crore. Advisory services under PMS include onshore and offshore advisory services where portfolio managers provide investment advisory services to their clients.
“Due to the on-going market rally, some portion of the assets may have moved from advisory services to non-discretionary services. This shift from assets under advisory to assets under management provides higher fees for the relationship managers,” says a portfolio fund manager.
Overall, the total number of clients in portfolio management services has increased by 12,000 in Apr-Jun. A large part of the increase remained confined to discretionary services.
The minimum investment under PMS is Rs.25 lakh.
AUM of portfolio managers as on June, 2017 (in crore Rs)
|
Period |
Discretionary including EPFO
|
Non-Discretionary |
Advisory |
Total |
|
June, 2017 |
1,023,416 |
76,518 |
183,172 |
1,283,106 |
|
March, 2017 |
9,67,036 |
75,061 |
188,385 |
12,30,482 |
|
Difference |
56,380.39 |
1,456.58 |
-5,213.18 |
52,623.79 |
|
Change in % |
5.83 |
1.94 |
-2.77 |
4.28 |
Source: SEBI