AUMs of PMS companies double to Rs 10.45 lakh cr during May
Although assets under management (AUMs) of portfolio management services (PMS) firms doubled to Rs 10.45 lakh crore in May 2016 from Rs5.16 lakh crore in 2012, keen competition and tougher norms have resulted in a fall in the number of managers over this time period.
Data from the Securities and Exchange Board of India (Sebi) shows that there are 188 registered portfolio managers at present, down from 267 in 2012. Industry watchers say barely 100 firms would be active, with a large chunk of the business being concentrated in the hands of the top 10-15 fund managers.
Varun Goel, PMS fund manager at Motilal Oswal AMC, said portfolio management is a tough business.
“The minimum ticket size has been raised from Rs 5 lakh to Rs 25 lakh and bigger investors are particular about returns as also the track record of the fund manager,” he said.
Current regulations mandate a portfolio manager must pay a registration fee of Rs 10 lakh and maintain minimum net worth of Rs 2 crore.
Further, a portfolio manager needs to furnish a detailed report on investments to clients at least once in six months. According to fund managers, a team of charted accountants is hired by fund houses to prepare these statements, which escalates the cost.
As per Sebi regulations, a portfolio manager is a person who advises, directs or undertakes management or administration of a portfolio of securities or funds. All the portfolio managers fall under the ambit of Sebi Portfolio Managers Regulations, 1993. The minimum ticket size for an investor to avail of PMS is Rs 25 lakh.
According to the regulations, there are three types of portfolio managers: discretionary,non-discretionary and advisory.
In discretionary PMS, the choice and timing of the investment decisions rest with the fund manager, while in non-discretionary PMS, the portfolio manager gives investment and the client takes the decision on choice and timing. The portfolio manager executes the trade on behalf of the client.
In advisory PMS, the portfolio manager gets paid only for the investment advice. The final decision and execution about investments are taken by the client on his own.
As on April 2016, total AUMs of discretionary portfolio managers stood at Rs 8.11 lakh crore while non-discretionary PMs managed assets worth Rs 60,122 crore. On the other hand, advisory PMs rendered services to AUMs worth Rs 1.74 lakh crore, Sebi data showed.
Market participants said the number of portfolio managers would go up in coming months as Sebi has now proposed to include foreign fund managers keen on relocating to India as portfolio managers.
The regulator last week released a discussion paper on the same.
– At present, there are 188 registered portfolio managers, down from 267 in 2012
– A large chunk of business is concentrated in the hands of top 10-15 fund managers, say industry watchers
– As per regulations, there are three types of portfolio managers: discretionary, non-discretionary, advisory