2 days ago
SEBI-Approved PRIM Adds New Choice Alongside PMS, Mutual Funds
Mutual funds, PMS and PRIM are three ways to have investments professionally managed.
In a mutual fund, many people put money into one shared portfolio and receive units.
In PMS, a manager directly buys securities for an individual investor, who generally needs at least ₹50 lakh.
PRIM is a new option requiring at least ₹25 lakh, where a manager chooses and adjusts mutual funds, ETFs and SIFs for the investor.
PRIM therefore has two layers of management: one manager chooses the funds, and another manages the investments inside those funds.
PMS can offer direct exposure to more kinds of securities, while PRIM focuses on diversification through funds.
Costs and exit charges differ across the three options.
Taxes can arise whenever a manager sells or switches investments, so investors should compare control, flexibility, cost and tax effects.
SEBI approved proposed 2026 Portfolio Managers Regulations, retaining the ₹50 lakh PMS minimum and introducing PRIM with a ₹25 lakh minimum.
PMS directly holds and manages eligible securities for each investor, while PRIM builds portfolios from direct mutual fund, SIF and ETF units.
Mutual funds pool investors’ money into scheme units, generally with minimum investments starting around ₹100.
PRIM fees are capped at 1% of client assets under management, while PMS fees have no equivalent cap and mutual fund costs are mainly expense ratios.
PMS and PRIM can trigger capital-gains events whenever the manager sells or switches investments, whereas mutual-fund investors generally control when units are redeemed or switched.
- Who
- SEBI, portfolio managers, mutual-fund managers and investors.
- What
- SEBI approved proposed 2026 regulations that retain conventional PMS and introduce the Portfolio Managers Route for Investing in Mutual Fund units, or PRIM.
- Where
- India, including investments through Indian asset management companies and permitted foreign securities or funds.
- When
- Under the proposed Securities and Exchange Board of India (Portfolio Managers) Regulations, 2026; the articles do not provide an implementation date.
- Why
- The framework is intended to provide professionally managed portfolios with different levels of customization, diversification, direct-security access and investor control.
Diversified Fund-Based Approach
Direct and Customised Approach
Portfolio construction
Diversified Fund-Based Approach
PRIM and mutual funds provide diversification through pooled funds, ETFs and SIFs; PRIM adds a manager who selects and rebalances those funds for the investor.
Direct and Customised Approach
Conventional PMS lets the manager directly select and manage a broader portfolio of equities, debt and other eligible securities under the investor’s mandate.
Investor control and flexibility
Diversified Fund-Based Approach
Mutual-fund investors choose schemes and allocation themselves, while PRIM investors retain ownership of units but delegate scheme selection and rebalancing to the portfolio manager.
Direct and Customised Approach
PMS can provide greater flexibility for investors seeking direct exposure to selected securities; discretionary PMS allows the manager to act within agreed limits, while non-discretionary PMS requires investor approval for transactions.
Costs and tax timing
Diversified Fund-Based Approach
PRIM has a fixed management-fee cap of 1%, but underlying fund expense ratios and possible fund-level loads also apply; mutual-fund costs are mainly scheme expense ratios.
Direct and Customised Approach
PMS has no equivalent management-fee cap and may include operating expenses, brokerage, levies and exit loads, but direct management avoids the additional underlying-fund expense layer; trades are taxable when sold.
Key facts
- PMS minimum
- ₹50 lakh
- PRIM minimum
- ₹25 lakh
- Typical mutual-fund minimum
- Generally ₹100, though it varies by scheme
- PRIM investment universe
- Direct plans of mutual funds, SIFs and ETFs
- PRIM management-fee cap
- Fixed fees capped at 1% of client assets under management; performance fees are allowed
- PMS permissible universe under 2026 proposal
- Listed equities and debt, IPOs, exchange-traded derivatives, foreign securities and up to 10% in investment-grade unlisted debt with client consent
- Tax treatment
- PMS trades, PRIM fund switches and mutual-fund redemptions or switches can create capital-gains events
Sources
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