What are PMS (Portfolio Management Services)?
PMS are the tailored investments portfolio in fixed income of an individual, in equity securities and structured products. It basically caters the investments of high net worth individuals with a minimum ticket size of Rs. 50 Lakh/-.
PMS services are discretionary or non-discretionary. In discretionary portfolio managers manage your portfolio by tracking the market and by keeping your investment criteria in mind whereas in non-discretionary investors can themselves take final decisions.
In PMS, individuals have to actively monitor and track the developments themselves on a regular basis. Since an experienced portfolio manager manages your investment, all you have to do is review the transactions periodically and get performance updates. This also helps in best returns in the investments.
What are AIF
AIFs involve higher minimum investment, and it includes higher risk and has probability of higher returns. These are the pooled investments for investing in hedge funds, venture capital, futures, and private equity.
That is why AIFs are considered to be the best by many of the investors.
PMS or AIF : Which one is better?
| Particulars | PMS | AIF |
| Regulation | They are regulated by SEBI (Portfolio Managers Regulations, 1993) | They are governed by SEBI (Alternative Investment funds Regulations, 2012) |
| Pooling of Funds | Funds are not pooled | Pooling funds are the essence of this kind of investment. |
| Number of Investors | There is no threshold limit. Portfolio Managers can have any number of clients | It should not exceed more than 1000. |
| Fees | Apart from the non-refundable fees of Rs 1,00,000/-, registration fees of Rs. 10 Lakh is to be submitted at the time of the grant of the certificate of registration. | Apart from the non-refundable fees, registration fees of Rs. 5 Lakh in category of AIF, Rs.10 Lakh in category II and Rs. 15 Lakh in category III of AIF is to be submitted. |
| Validity of Registration | It is valid upto three years, and it should get renewed at least 3 months before the expiry. | It is valid until the AIF is wound up. |
| Types | PMS have two categories-DiscretionaryNon-discretionary | AIF’s are of three types-Category ICategory IICategory III |
| Segregation of Funds | Funds of every client are segregated separately in a DEMAT Account. | There is no segregation of funds required |
| Minimum Investment Limit | 25,00,000/- (25 Lakh) | 1 Crore |
| Corpus Requirement | No Corpus required | Each scheme is required to have a corpus fund of Rs. 20 crore. In case of angel funds the requirement of Rs. 10 Crore. |
| Listing | No Listing | Close ended units can be listed after the closure of such limits. |
| Tenure of securities | No minimum time limit is prescribed. It is adhered by an agreement between the portfolio manager and client | Category I and II have tenure of three years which can be extended upto 2 years. |
Conclusion
Therefore there are many differences between the PMS and AIFs. There is an increase in the interest investor in these areas SEBI is planning to align the services of PMS and AIFs both. In 2003 SEBI increased the investment requirement from 5 Lakh to 25 Lakh and now they are planning to increase upto 1 Crore as of AIFs.
Since Both the PMS and AIFs are high risks, involves higher returns, it is crucial to have an excellent.
Get our expert services and guidance over investment in PMS or AIFs.