Archive · 24 Jul 2026
SEBI Proposes MF-Only PMS Framework
The Securities and Exchange Board of India (SEBI) has proposed significant changes to portfolio management regulations.
They want to create a new type of service called a Mutual Fund-only Portfolio Management Service (MF-PMS).
This service will allow professional fund managers to handle client money in direct plans of mutual fund schemes, including exchange-traded funds and specialized investment funds.
The minimum investment for this service will be lowered to ₹25 lakh from ₹50 lakh, making it more accessible.
Additionally, portfolio managers will be allowed to invest in a wider range of assets, including to-be-listed securities, unlisted debt securities, and overseas assets.
These changes aim to provide more investment opportunities and make the regulatory framework simpler and more flexible.
SEBI proposes a mutual fund-only PMS category to bring professionally managed mutual fund portfolios to a wider pool of affluent investors.
The minimum investment threshold for MF-PMS is proposed to be lowered to ₹25 lakh from ₹50 lakh.
Portfolio managers will be allowed to invest in to-be-listed securities, unlisted debt securities, and overseas assets.
Fixed management fees under the MF-PMS framework will be capped at 2.5% of client's AUM.
The regulator has proposed easing operational requirements for smaller portfolio managers and phasing out legacy grandfathering provisions.
- Who
- The Securities and Exchange Board of India (SEBI)
- What
- Proposed a revamp of portfolio management regulations, including a mutual fund-only PMS and an expanded investment universe.
- When
- The consultation paper was issued on Thursday.
- Where
- India
- Why
- To broaden investment avenues, ease compliance, and simplify the regulatory framework for the growing portfolio management industry.
Proponents of the Changes
Critics of the Changes
Investment Universe Expansion
Proponents of the Changes
Proponents argue that expanding the investment universe to include to-be-listed, unlisted securities, and overseas assets will provide more opportunities for portfolio managers and investors.
Critics of the Changes
Critics worry that investing in unlisted and to-be-listed securities may increase risk and reduce transparency.
Lower Entry Threshold
Proponents of the Changes
Proponents believe lowering the minimum investment threshold to ₹25 lakh will make the MF-PMS more accessible to a wider pool of affluent investors.
Critics of the Changes
Critics argue that reducing the threshold may attract less sophisticated investors who may not fully understand the risks involved.
- Regulatory Body
- Securities and Exchange Board of India (SEBI)
- Proposed Service
- Mutual Fund-only Portfolio Management Service (MF-PMS)
- Current Minimum Investment
- ₹50 lakh
- Proposed Minimum Investment for MF-PMS
- ₹25 lakh
- Current Minimum Net Worth Requirement
- ₹5 crore
- Proposed Minimum Net Worth Requirement
- ₹2 crore
- Maximum Fixed Management Fees
- 2.5% of client's AUM
- Investment in Unlisted Debt Securities
- Up to 10% of client's AUM
Sources
Sebi proposes MF-only portfolio management service, wider investment universe
Sebi plans massive overhaul of portfolio manager rules. Here are the proposed changes
SEBI proposes MF-only PMS framework
Overhaul of portfolio management services: What SEBI has proposed and what it means for investors
