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SEBI Broadens Portfolio Management Rules, Adds Mutual Fund Route
SEBI is India’s market regulator, and it approved many new rules for investment services.
The biggest change is a new rulebook for portfolio managers.
These managers can now invest some client money in more types of assets, including certain unlisted debt and overseas investments.
They can also use exchange-traded derivatives within a set limit.
A new option called PRIM lets them invest client money in direct plans of mutual funds.
This option requires at least ₹25 lakh to invest.
SEBI also created independent fund managers who can work with registered portfolio managers.
The registered portfolio manager remains responsible for their work.
SEBI said the shorter rulebook should make compliance clearer and easier.
SEBI approved new Portfolio Managers Regulations, 2026, replacing the 2020 framework.
Discretionary portfolio managers may invest up to 10% of client AUM in investment-grade, non-convertible unlisted debt with client consent.
Portfolio managers can gain overseas securities exposure and use exchange-traded derivatives up to 1.25 times client AUM.
The new PRIM route allows investment in direct mutual fund plans, with a ₹25 lakh minimum investment and fees capped at 1% for fixed-fee structures.
SEBI also approved reforms covering REITs, InvITs, alternative investment funds, commodity derivatives, investor accreditation and research analysts.
- Who
- The Securities and Exchange Board of India (SEBI).
- What
- SEBI approved a broad package of reforms, including new Portfolio Managers Regulations, 2026, and a mutual-fund-only investment route called PRIM.
- Where
- India’s securities and investment markets.
- When
- The reforms were approved on Thursday and the article was published on September 24, 2026.
- Why
- To broaden investment options, strengthen investor protections, and improve clarity, compliance and ease of doing business.
Key facts
- New PMS framework
- The SEBI (Portfolio Managers) Regulations, 2026 replace the 2020 regulations.
- Unlisted debt limit
- Up to 10% of client AUM in investment-grade, non-convertible unlisted debt under discretionary PMS, subject to client consent.
- Derivatives exposure
- Exchange-traded derivatives exposure may reach up to 1.25 times client AUM.
- PRIM minimum investment
- ₹25 lakh for the Portfolio Managers Route for Investing in Mutual Fund Units.
- PRIM management fee
- Fixed management fees are capped at 1% of client AUM; performance-linked fees are also allowed.
- Portfolio manager net worth
- The minimum net-worth requirement is ₹2 crore.
- Rulebook reduction
- The revised PMS regulations have been reduced from 70 pages to 33, and provisos from 47 to four.
Quotes
Sandeep Jethwani
Co-founder of Dezerv
“The introduction of PRIM — allowing portfolio managers to offer mutual fund and SIF-based strategies at a ₹25 lakh ticket size — meaningfully widens access and brings more investors into a well-regulated, professionally managed framework”
livemint.com
“Our research, based on over 8 lakh portfolio reviews, shows that more than half of investor portfolios underperform their benchmarks”
livemint.com
Sources
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