PMS Players Urge SEBI To Allow Them To Manage ‘New Asset Class’

It will provide unique investment strategies, such as long-short equity funds and inverse exchange-traded funds, with a lower minimum investment threshold compared to traditional PMS

The Association of Portfolio Managers in India has urged the market regulator SEBI to allow portfolio management services (PMS) players to become investment managers for a new asset class currently in development.

Speaking to Bizz Buzz, Divam Sharma, Founder and Fund Manager at Green Portfolio PMS, said, “PMS is better equipped to offer emerging HNIs customised investment solutions. The growing ecosystem needs more professionals to manage the expanding investor base.” “We believe that the new asset class being offered to the PMS players will be a positive for the industry which needs more professionals and for the investors who would get more offerings from such professionals,” he said.

Experts opine that the new asset class resonates more with the profile of PMS professionals and inclusion of PMS will help with overall better evolution of ecosystem to service the need of an asset class between PMSs and mutual funds.

Amit Goel, Co-Founder & Chief Global Strategist, Pace 360, said, “This new asset class, unlike exiting mutual funds, which can be purchased for as low as Rs 500, will be a pooled savings vehicle with a minimum investment size of Rs10 lakh. With a ticket size lower than the Rs 50 lakh threshold for PMS offerings, this new product is positioned at the intersection of mutual funds and PMS.” It will provide unique investment ideas that are currently unavailable to many, with diverse risk-return profiles. ‘Long-short equity funds’ and ‘inverse exchange-traded funds’ are two suggested tactics. Compared to mutual funds, the proposed new asset class will be run with more relaxed operating guidelines.

By allowing PMS players to become investment managers for this new asset class, SEBI could potentially expand the range of investment options available to investors and increase competition in the market. This could lead to lower costs for investors and better investment performance. However, SEBI may have concerns about the potential risks associated with allowing PMS providers to manage investment funds. PMS providers are typically less regulated than investment managers, and they may not have the same level of expertise or resources. Bhavik Takkar, Chief Executive Officer Wealth Management ABANS said, “SEBI has conceptualised ‘new asset class’ as a product category for retail investors to experience alternative investment products type experience which is currently available only to HNIs as ticket size is higher.”

MF fund management’s current ecosystem does not necessarily offer fund management capabilities of such alternative investment management and hence it is appropriate if PMS managers are also allowed to act as investment managers for new asset class. All MF entities offering alternative investment products have separate fund managers who do not manage MF scheme that itself shows that different skill set is required to handle alternative investments compared to MF schemes.