The Securities and Exchange Board of India (SEBI) has approved a new framework for Portfolio Management Services (PMS), introducing changes to how portfolio managers can manage and invest client money.
One of the key changes is the introduction of PRIM, Portfolio Managers’ Route for Investing in Mutual Fund Units. The new route will allow portfolio managers to manage investments in eligible mutual fund units, including ETFs, index funds, and Specialized Investment Funds (SIFs).
The minimum investment under PRIM will be ₹25 lakh.
What is the new PRIM route?
PRIM is a new route under the PMS framework that allows portfolio managers to invest client funds in eligible direct mutual fund plans.
The route will cover mutual fund units such as:
- ETFs
- Index funds
- Specialised Investment Funds (SIFs)
An existing portfolio manager can offer PRIM as a separate investment approach, subject to SEBI's prescribed conditions. SEBI has also provided for a dedicated registration route for applicants who want to operate within the permissible securities under PRIM.
What is the minimum investment for PRIM?
SEBI has set the minimum investment for the new PRIM route at ₹25 lakh. This ₹25 lakh threshold applies to the new PRIM route. It should not be understood as a change to the minimum investment requirement for every PMS product.
PMS can invest in overseas securities
SEBI has also expanded the investment universe available to portfolio managers. Under the approved framework, PMS can invest in certain foreign securities, subject to applicable conditions and regulations.
The framework also permits portfolio managers to invest in areas such as IPOs, primary-market debt issuances, and certain exchange-traded derivatives.
What about unlisted debt?
SEBI has also allowed discretionary portfolio managers to invest up to 10% of client AUM in investment-grade, unlisted, non-convertible debt securities, subject to the prescribed conditions and client consent.
A new Independent Fund Manager concept
The revised PMS framework also introduces the concept of an Independent Fund Manager (IFM). The framework allows an IFM to manage client portfolios in association with a registered portfolio manager, subject to the conditions prescribed by SEBI.
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