With sophisticated investors looking beyond traditional retail-oriented investments, Portfolio Management Services (PMS) and Alternative Investment Fund (AIF) structures are gaining massive traction and the assets base of these products is expected to cross Rs 50 lakh crore by 2031.
PMS and AIF are emerging as strong alternatives to grow wealth and investments, PMS Bazaar said at the annual summit ‘PMS & AIF 4.0: Alternative Assets For All Seasons’. PMS Bazaar is a platform for investors and intermediaries looking for PMS and AIF information, analytics and comparisons to help investors create wealth using this wealth-building medium.
“By 2031, the PMS and AIF industry is expected to cross Rs 50 lakh crore on the back of 20 per cent CAGR (compound annual growth rate) growth,” it said. It further said PMS and AIF products generate healthy returns, achieve better penetration and thrive in a favourable regulatory landscape. According to official data, assets under management of discretionary and non-discretionary PMS (non-EPFO) stood at Rs 3.97 lakh crore at the end of October 2021.
This is expected to grow six-fold and surpass Rs 24 lakh crore by 2031, boosted by robust returns, world-class transparency and unique investment strategies. Further, the size of AIF industry across all categories stood at Rs 4.87 lakh crore, according to latest data shared by companies. This is expected to grow over 6-fold and reach Rs 30 lakh crore figure in the next 10 years. “With rising affluence and the preference for a wider variety of risk-return combinations that can be generated across asset classes; PMS and AIFs are becoming the mainstay of any Wealth management proposition,” Aashish P Somaiyaa, chief executive officer of WhiteOak Capital Management, said.
Vikas M Sachdeva, chief executive officer of EMKAY Investment Managers, said the recent years have seen the global alternative industry grow at a rapid pace. This is largely driven by a need to enhance returns and increase diversification. This growth is also supported by external conditions such as lower interest rates, availability of information, the maturation of emerging markets, and a structural change in capital formation, he said. “Given the current state of the industry, and the recent developments in regulations it is expected that India’s alternative industry will follow the global trend and take a greater share of India’s investable universe,” he added.
A tool for long-term wealth creation, PMSes offer many advantages such as more customisation with investment strategies in tune with investors’ risk appetite. The minimum investment in PMS is Rs 50 lakh. On the other hand, AIFs, which have a minimum ticket size of Rs 1 crore, offers investors access to sophisticated strategies across different asset-classes and more diversification in a risk-adjusted manner.