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Business Standard
29-07-2025
- Business
- Business Standard
Why PMS' need to be viewed differently from investing in a mutual fund
To open a PMS (Portfolio Management Services) account requires 37 signatures from a resident Indian. Even with digital onboarding, one still requires a physical signature to validate power of attorney, a new demat account, and in some cases even a new trading account and bank account opened. Not to mention the incremental audit and tax filing requirements this poses. Thus, it only makes sense that with all of these impediments, there should be a distinct purpose that a PMS serves for an investor versus a mutual fund (MF), which is relatively easier to start. There are two reasons why one should consider investing in a PMS. First, the customisation it offers. This is the primary feature by design for a PMS given each account is opened in an individual investor's name. It allows you to omit businesses from your portfolio that don't align with your ethical/ religious beliefs or where there might be a conflict of interest. It also enables you to request for tax loss harvesting which is impossible to do in a MF's NAV structure. There are finer aspects such as investing in businesses that are at the right price at the time of your investment rather than being tagged along in winners where most of the gains are already through. Enabling this degree of personalisation is a yard stick one must judge the PMS on for this truly offers a different investment vehicle possibility versus a MF today. The second reason is this possibility of a different outcome versus MF investment itself. There are two aspects to this different outcome- higher returns (of course this is an expectation) and non-correlation of returns. The latter is missed by most. A PMS portfolio even without any customisation is typically more concentrated. There is a higher concentration of smaller/ niche businesses in these portfolios as liquidity concerns in a particular stock's trading volume aren't as colossal as they are for some of the MFs. Furthermore, future flows do not change the outcome of your portfolio by adding more companies to it. All of this should result in outcomes that have lesser if not zero correlation to market returns. This collection of 15-25 small businesses in your portfolio can have a very different outcome versus the index. They need to be therefore assessed differently. The outcome cannot be judged on a monthly basis. The integrity of the style as marketed must definitely be judged on an ongoing basis. A complete visibility into transactions unlike MFs allows for the same. Assessment criteria However, if an investor wants a different outcome versus MFs, the assessment criteria must be different. The daily NAV tracking nature of MF investors has cornered the respective fund managers into ensuring they toe the line with their benchmarks. Ease of transactions in MF have made investing there akin to outcomes of ODIs in knockout. AMFI data as of FY25 year-end shows that over 45 per cent of equity investors redeem from a folio in less than 2 years. This is after a good two year run. The same data at the end of FY23 was 10 percentage points higher! Investing in PMS should be looked at as a test series. You can judge consistency on an ongoing basis but the outcome is drawn out as per the stated objective of the fund. A growth strategy PMS must be judged on a quarterly basis on the earnings growth of the portfolio, a momentum strategy on the up-capture performance, and so on. However, to burden PMS managers too with the same monthly NAV benchmarking is cornering the fund manager into giving you a me too product vs. the differentiated outcome the investor came looking for. In a PMS, having bought into the philosophy of the fund, an investor must judge the style integrity constantly and not performance alone.
Economic Times
08-07-2025
- Business
- Economic Times
AMC stocks rise over 3% as Sebi mulls easing mutual fund business norms
Shares of asset management companies (AMCs) such as HDFC AMC, Aditya Birla Sun Life AMC, Nippon Life India AMC, and others rose up to 3.5% on Tuesday after the Securities and Exchange Board of India (Sebi) proposed easing regulations related to mutual fund (MF) business operations. ADVERTISEMENT HDFC Asset Management Company shares rose as much as 3.3% to touch a high of Rs 5,162.30 during the session. Nippon Life India Asset Management also saw strong buying interest, climbing 3.2% to hit Rs 804.95. Aditya Birla Sun Life AMC advanced 3.15% to reach a day's high of Rs 837.65, while UTI Asset Management gained 1.4%, hitting an intraday peak of Rs 1,327.95. In a circular issued on Monday, Sebi proposed relaxing the broad-basing requirement under Regulation 24(b) of the MF Regulations. This would allow AMCs to offer management and advisory services to non-broad-based pooled funds, subject to stringent governance standards and regulatory oversight. Currently, AMCs are permitted to offer such services only to broad-based pooled assets. Those seeking to serve non-broad-based funds must obtain a Portfolio Management Services (PMS) acknowledged that several AMCs have raised concerns that the existing rules limit their ability to compete with other intermediaries offering similar services. The restrictions, they said, have acted as a barrier to entry and hindered access to new opportunities in managing pooled assets—an area where AMCs already possess strong domain expertise.'However, restrictions due to the broad-basing criteria do not permit AMCs to take up such mandates,' Sebi noted in the circular. ADVERTISEMENT Sebi has sought public comments on the proposal by July addition, Sebi has proposed an expansion of permissible activities for AMCs and their subsidiaries, allowing them to undertake operations ancillary to their core business—such as distribution and marketing services. These activities must fall under the regulatory oversight of a domestic or foreign regulator, ensuring that all such operations remain within the ambit of a recognized regulatory framework, the circular added. ADVERTISEMENT The circular has addressed four potential conflicts that may arise if these norms are relaxed. These include: diversion of resources and fees charged, contra-trade and front running, trading based on inside information, and inter-business transfer of assets on unfavourable terms to mutual fund will be required to ensure that resources allocated to pooled non-broad-based funds are proportionate to the fees earned from such funds, and that mutual fund (MF) investors are not made to bear the cost of these products. Sebi may also prescribe a range of fees that AMCs can charge from their pooled non-broad-based funds. ADVERTISEMENT Key personnel responsible for investment decision-making and fund management will need to be segregated. A fund manager may be common only if the investment objectives and asset allocation are the same and replicated across all the funds managed by that individual, the circular stated. (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times) (You can now subscribe to our ETMarkets WhatsApp channel)
Economic Times
08-07-2025
- Business
- Economic Times
AMC stocks in focus as Sebi mulls easing mutual fund business norms
Shares of AMCs like HDFC AMC, Aditya Birla Sun Life AMC, and Nippon Life India AMC are likely to be in focus after Sebi proposed easing norms governing mutual fund operations. The regulator plans to relax the broad-basing requirement, allowing AMCs to manage non-broad-based pooled funds without a PMS licence, subject to strict regulatory oversight. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Shares of asset management companies (AMCs) such as HDFC AMC Aditya Birla Sun Life AMC , Nippon Life India AMC, and others will be in focus on Tuesday after the Securities and Exchange Board of India (SEBI) proposed easing regulations related to mutual fund (MF) business a circular issued on Monday, SEBI proposed relaxing the broad-basing requirement under Regulation 24(b) of the MF Regulations. This would allow AMCs to offer management and advisory services to non-broad-based pooled funds, subject to stringent governance standards and regulatory AMCs are permitted to offer such services only to broad-based pooled assets. Those seeking to serve non-broad-based funds must obtain a Portfolio Management Services (PMS) acknowledged that several AMCs have raised concerns that the existing rules limit their ability to compete with other intermediaries offering similar services. The restrictions, they said, have acted as a barrier to entry and hindered access to new opportunities in managing pooled assets—an area where AMCs already possess strong domain expertise.'However, restrictions due to the broad-basing criteria do not permit AMCs to take up such mandates,' Sebi noted in the has sought public comments on the proposal by July addition, Sebi has proposed an expansion of permissible activities for AMCs and their subsidiaries, allowing them to undertake operations ancillary to their core business—such as distribution and marketing services. These activities must fall under the regulatory oversight of a domestic or foreign regulator, ensuring that all such operations remain within the ambit of a recognized regulatory framework, the circular circular has addressed four potential conflicts that may arise if these norms are relaxed. These include: diversion of resources and fees charged, contra-trade and front running, trading based on inside information, and inter-business transfer of assets on unfavourable terms to mutual fund will be required to ensure that resources allocated to pooled non-broad-based funds are proportionate to the fees earned from such funds, and that mutual fund (MF) investors are not made to bear the cost of these products. Sebi may also prescribe a range of fees that AMCs can charge from their pooled non-broad-based personnel responsible for investment decision-making and fund management will need to be segregated. A fund manager may be common only if the investment objectives and asset allocation are the same and replicated across all the funds managed by that individual, the circular stated.
Economic Times
23-06-2025
- Business
- Economic Times
Plans to make mutual fund rules more investor and industry friendly: Sebi official
SEBI is overhauling mutual fund regulations to be more investor-friendly and boost industry growth, according to Executive Director Manoj Kumar. The aim is to simplify existing rules and adapt to evolving investor needs. SEBI is also reviewing scheme categorization and has introduced a new product category, SIF, for larger investments. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads The Securities and Exchange Board of India (SEBI) is undertaking a comprehensive review of mutual fund regulations to make them more investor-centric and industry-friendly, a senior official said on Saturday."We are reviewing the entire mutual fund regulatory framework to enhance ease of doing business for all stakeholders, including the regulator," SEBI executive director Manoj Kumar said at the 17th Mutual Fund Summit organised by the Indian Chamber of Commerce (ICC) regulations governing the sector are among the lengthiest and require simplification to keep pace with evolving investor needs and industry innovations, stakeholders said."The process has started and soon we will come out with draft regulations for feedback and consultation process before it is finalised," Kumar said without giving any timeline for the rollout of the new outlined the regulator's strategic roadmap to strengthen India's securities market, with mutual funds positioned as a critical pillar in fostering inclusive financial growth and investor protection.A consultation paper on regulations which governs advisory functions in mutual funds is also in the the event, Kumar said India has undergone major market transformations under SEBI's include the shift to an electronic trading ecosystem in 1998, followed by achieving 100 per cent dematerialisation of shares, making India the only jurisdiction globally to do so."The third transformation is unfolding now through the mutual fund revolution," he said, calling it a cornerstone of SEBI's "optimum regulation" approach, one that seeks balance among the interests of the regulator, the industry, and India's mutual fund industry has crossed Rs 72 lakh-crore in AUM and monthly SIP contributions have touched Rs 28,000 crore, the investor base remains limited to just five crore in a population of 140 crore, Kumar pointed is also actively reviewing scheme categorisation norms to make them more intuitive for investors, while ensuring all offerings remain "true to label" to prevent offer wider choice to investors, SEBI has approved a new product category, referred to as SIF, aimed at investors with ticket sizes between Rs 10 lakh and Rs 50 funds were selected to manage these products given their established governance and handling of retail SEBI has opened faster registration windows for Portfolio Management Services (PMS) and Alternative Investment Funds (AIF) with similar industry concerns over stress test disclosures for mid- and small-cap funds, Kumar reaffirmed SEBI's disclosure-based regulatory model, stressing that informed investors are central to market he acknowledged that some disclosure requirements may seem burdensome, he assured stakeholders that SEBI remains open to feedback and streamlining urged the industry to avoid situations that warrant regulatory intervention, saying, "Our goal is not to disrupt but to allow business to thrive."Highlighting the untapped potential in eastern India, Kumar said SEBI views West Bengal and the Northeast as strategic regions for mutual fund expansion, underscoring the need for targeted penetration this vision, AMFI chief executive V N Chalasani said India is transitioning from financial inclusion to financial well-being, where saving smartly and investing wisely will enable sustainable wealth cited the exponential growth of mutual funds post-2017, following SEBI's investor education mandate, which helped expand the investor base and improve financial Chalasani pointed out that India's mutual fund AUM still forms only about 20 per cent of GDP, compared to a global average of 65 per stressed the need for deeper financial literacy, especially in Tier 3 and 4 cities, where AMFI is focusing through school and university programmes, distributor expansion via India Post, and new product innovations aimed at mid-income investors."Every Indian can evolve from a saver to an investor and ultimately a wealth creator," he said, calling for sustained collaboration between regulators, industry, educators and investors to build an empowered, financially resilient India. PTI
The Print
22-06-2025
- Business
- The Print
Plans to make mutual fund rules more investor and industry friendly: SEBI official
Existing regulations governing the sector are among the lengthiest and require simplification to keep pace with evolving investor needs and industry innovations, stakeholders said. 'We are reviewing the entire mutual fund regulatory framework to enhance ease of doing business for all stakeholders, including the regulator,' SEBI executive director Manoj Kumar said at the 17th Mutual Fund Summit organised by the Indian Chamber of Commerce (ICC) here. Kolkata, Jun 21 (PTI) The Securities and Exchange Board of India (SEBI) is undertaking a comprehensive review of mutual fund regulations to make them more investor-centric and industry-friendly, a senior official said on Saturday. 'The process has started and soon we will come out with draft regulations for feedback and consultation process before it is finalised,' Kumar said without giving any timeline for the rollout of the new rules. Kumar outlined the regulator's strategic roadmap to strengthen India's securities market, with mutual funds positioned as a critical pillar in fostering inclusive financial growth and investor protection. A consultation paper on regulations which governs advisory functions in mutual funds is also in the pipeline. Addressing the event, Kumar said India has undergone major market transformations under SEBI's stewardship. These include the shift to an electronic trading ecosystem in 1998, followed by achieving 100 per cent dematerialisation of shares, making India the only jurisdiction globally to do so. 'The third transformation is unfolding now through the mutual fund revolution,' he said, calling it a cornerstone of SEBI's 'optimum regulation' approach, one that seeks balance among the interests of the regulator, the industry, and investors. While India's mutual fund industry has crossed Rs 72 lakh-crore in AUM and monthly SIP contributions have touched Rs 28,000 crore, the investor base remains limited to just five crore in a population of 140 crore, Kumar pointed out. SEBI is also actively reviewing scheme categorisation norms to make them more intuitive for investors, while ensuring all offerings remain 'true to label' to prevent mis-selling. To offer wider choice to investors, SEBI has approved a new product category, referred to as SIF, aimed at investors with ticket sizes between Rs 10 lakh and Rs 50 lakh. Mutual funds were selected to manage these products given their established governance and handling of retail flows. Parallelly, SEBI has opened faster registration windows for Portfolio Management Services (PMS) and Alternative Investment Funds (AIF) with similar offerings. Addressing industry concerns over stress test disclosures for mid- and small-cap funds, Kumar reaffirmed SEBI's disclosure-based regulatory model, stressing that informed investors are central to market resilience. While he acknowledged that some disclosure requirements may seem burdensome, he assured stakeholders that SEBI remains open to feedback and streamlining processes. He urged the industry to avoid situations that warrant regulatory intervention, saying, 'Our goal is not to disrupt but to allow business to thrive.' Highlighting the untapped potential in eastern India, Kumar said SEBI views West Bengal and the Northeast as strategic regions for mutual fund expansion, underscoring the need for targeted penetration efforts. Echoing this vision, AMFI chief executive V N Chalasani said India is transitioning from financial inclusion to financial well-being, where saving smartly and investing wisely will enable sustainable wealth creation. He cited the exponential growth of mutual funds post-2017, following SEBI's investor education mandate, which helped expand the investor base and improve financial awareness. However, Chalasani pointed out that India's mutual fund AUM still forms only about 20 per cent of GDP, compared to a global average of 65 per cent. He stressed the need for deeper financial literacy, especially in Tier 3 and 4 cities, where AMFI is focusing through school and university programmes, distributor expansion via India Post, and new product innovations aimed at mid-income investors. 'Every Indian can evolve from a saver to an investor and ultimately a wealth creator,' he said, calling for sustained collaboration between regulators, industry, educators and investors to build an empowered, financially resilient India. PTI BSM MNB This report is auto-generated from PTI news service. ThePrint holds no responsibility for its content.
