More and more large distributors, particularly banks, which were focused on selling mutual fund products earlier, have taken to selling PMS products. Even some independent financial advisors, or IFAs, are actively looking at this space. This is mainly because of the higher margins associated with selling PMS schemes as opposed to mutual fund products.

?Several private sector banks have started aggressively selling PMS products from various PMS providers,? said Rupesh Nagda, head ? investment and products, Alchemy Capital Management, a wealth management firm. ICICI Bank, HDFC Bank, IndusInd Bank and Kotak Mahindra Bank are some of the banks active in this space. Distributors typically get around 2% upfront on the total amount that they mobilise in the case of PMS products. In comparison, they can get a maximum of 1.25% commission from selling MF products ? 0.75% upfront and 0.5% as trail commission.

The trend can be attributed largely to Sebi?s move to ban entry load in mutual funds from August 2009.

According to market observers, many PMS providers are now constructing products with the minimum ticket size of Rs 5 lakh to be sold through IFAs and banks. Banks are either entering into exclusive tie-ups with these PMS providers or tying up simultaneously with different PMS providers to sell their products.

However, not all private sector banks have taken to selling PMS. ?Some banks have their own AMC and so there may be internal restrictions on distributing PMS schemes of other entities,? said Manish Boricha, VP ? business head (PMS and HNI) of Sharekhan, which is in talks with a few banks for distributing its PMS products. IFAs have also been slow to adopt PMS products. ?While it?s easy to talk about mutual funds, not all advisors will be comfortable talking about specific stocks and justifying stock picks to their clients. Since PMS is a very niche product, these advisors have to be well-qualified,? said Boricha. Also, not many IFAs have a good network of high net worth clients.

?One must remember that the PMS space is still small and appeals only to the HNIs. There is a large segment of investors that is left out,? said Sameer Kamdar, CEO, ASK Investment Managers.