The portfolio management services (PMS) industry has witnessed a steady decline in its investor base for three consecutive months amid heightened market volatility and some profit booking, according to data from the Association of Portfolio Managers in India (APMI).
The industry saw a monthly decline of 310 clients in May, marking the third consecutive fall after losing 1,038 and 3,738 clients in March and April, respectively. Overall, the total client base has declined from around 217,000 to 212,000.
The decline was largely driven by the discretionary segment, where fund managers have complete autonomy over investment decisions. However, assets under management in discretionary PMS saw a marginal increase, rising from Rs 35.45 lakh crore to Rs 36.06 lakh crore.
APMI board member Vikas Khemani said the moderation in client numbers should be viewed as a phase of consolidation rather than a sign of weakening demand for PMS products.
“During periods of uncertainty, investors typically take longer to commit fresh capital, particularly in discretionary investment products, preferring to assess market conditions before making any allocation decisions,” he said.
Discretionary Net Inflows
Along with the decline in client additions, net inflows into discretionary PMS fell sharply by 91% in May. Sandeep Jethwani, co-founder of Dezerv, attributed the drop to profit booking, lower gross inflows amid market uncertainty, and continued outflows.
Commodity ETF Shifts
Rajkumar Singhal, MD and CEO of Quest Investment Managers, said investor interest in PMS may have also been impacted as some high-net-worth individuals (HNIs) shifted towards commodity exchange-traded funds (ETFs) to chase recent rallies, driven by recency bias.
“Unlike mutual funds, PMS does not have the concept of regular monthly investments such as SIPs, making inflows more volatile,” he said, adding that PMS investors tend to move capital faster during periods of volatility compared with retail investors in mutual funds.
Experts, however, believe improving global market conditions in June could support the industry’s recovery. Jethwani expects inflows to normalise and gradually strengthen in the coming months, supported by sustained participation from HNIs and ultra-high-net-worth individuals (UHNIs).
Singal said moderation in valuations, along with an improvement in earnings, could lead to better market performance ahead and boost investor participation in PMS.