Invest Smarter With PMS & AIFs

A PMS is a professional service where a SEBI-registered fund manager builds and manages a portfolio of stocks or bonds for you. Unlike mutual funds, the securities are held directly in your demat account. That means you see exactly what you own, and the portfolio is tailored to you.

HNIs prefer PMS because it offers more control, higher transparency, and often more focused portfolios compared to mutual funds. It's almost like having a private chef instead of eating from a buffet — the menu is crafted just for you.

An AIF is a pooled investment vehicle that gives access to opportunities beyond regular stocks and bonds. Think private equity, venture capital, long-short equity funds, private credit, or even real estate.

AIFs are designed for investors who want exposure to specialized strategies or less traditional assets. They work well for people who already have a base portfolio and are ready to explore new ways of compounding wealth.

PMS: ₹50 lakh minimum (as per SEBI).

AIF: ₹1 crore minimum.

These high entry points make them suitable only for HNIs and UHNWIs who can afford to take on additional risk and have a long-term horizon.

With PMS, you own the actual securities in your account; with mutual funds, you own units of a pooled scheme. PMS portfolios are typically concentrated (15–25 stocks), while mutual funds may hold 40–70 stocks.

The PMS advantage is personalization and transparency, while mutual funds are standardized and easier for mass retail investors.

PMS: Taxed like direct equity. STCG = 15%, LTCG = 10% beyond ₹1 lakh. Dividends and interest are also taxed.

AIF: Depends on category.

Category I & II: Pass-through; investors pay tax.

Category III: Taxed at fund level (~42.7%).

Understanding taxation is critical because it affects net returns.

Yes, risk is part of the game here. PMS portfolios can be volatile since they're concentrated in fewer stocks. AIFs have risks depending on strategy — default risk in credit funds, illiquidity in private equity, leverage in hedge funds.

But higher risk is also what creates the potential for higher returns. The key is aligning strategy with your own comfort level and horizon.

Yes, NRIs can invest subject to SEBI and RBI rules. This is usually done through NRE (repatriable) or NRO (non-repatriable) accounts.

GIFT City is making this even easier, offering tax efficiency and regulatory clarity for NRIs who want to invest back in India.

Both PMS and AIFs usually charge:

• A fixed management fee (1–2% annually).

• A performance fee (10–20% of profits above a hurdle rate).

Always focus on net returns after fees, not gross performance.

PMS: No strict lock-in, but 3–5 years is recommended for compounding and tax efficiency.

AIF: Usually 3–7 years, especially for private equity or real estate strategies.

HNIs who already have a strong base portfolio in mutual funds or bonds, and are looking for:

• Professional management.

• More focused or alternative strategies.

• The potential for alpha.

They suit investors who can handle volatility and don't need immediate liquidity.