Wealth Management Revolution: SEBI Unlocks New Investment Universe For PMS

The Securities and Exchange Board of India (SEBI) has approved a major overhaul of the Portfolio Management Services (PMS) framework, expanding the investment universe available to portfolio managers while simplifying several compliance requirements.

The changes were approved at SEBI’s board meeting on September 24, 2026, through the new SEBI (Portfolio Managers) Regulations, 2026, which will replace the existing 2020 regulations. The revised framework aims to provide greater flexibility to PMS providers while making the regulatory structure simpler and more efficient.

PMS Investors Can Now Access IPOs And Overseas Securities

One of the biggest changes is that portfolio managers will now be allowed to invest client funds in Initial Public Offerings (IPOs) and primary market debt issuances.

Earlier, PMS strategies were largely focused on listed securities in the secondary market. The new framework expands the investment options available to portfolio managers by allowing participation in primary market opportunities.

SEBI has also permitted discretionary and non-discretionary PMS providers to invest in foreign securities. The permitted investments include overseas listed equities, debt securities, REITs, Mutual Funds, ETFs, Index Funds and foreign government securities, subject to applicable foreign exchange regulations.

The move gives PMS managers greater flexibility to diversify portfolios beyond Indian markets and access global investment opportunities.

ETF Exposure Limit Increased

SEBI has also provided more flexibility in exchange-traded fund investments.

Under the revised framework, portfolio managers will be allowed to invest in ETFs up to 1.25 times the client’s assets under management (AUM). This provides additional room for portfolio managers to manage liquidity and implement investment strategies using ETFs.

The minimum investment threshold for PMS remains unchanged at Rs 25 lakh.

New Route For PMS Players To Invest In Mutual Funds

SEBI has introduced the Portfolio Managers Route for Investing in Mutual Fund Units (PRIM). Under this framework, portfolio managers will be able to invest client money in direct plans of mutual funds, including ETFs, index funds and specialised investment funds (SIFs).

The fixed management fee under the PRIM route will be capped at 1 per cent of client AUM, while performance-based fee structures will also be permitted. This creates a separate route for PMS providers to use mutual fund products while managing client portfolios.

Investment In Unlisted Debt Gets A New Framework

The revised rules also allow discretionary PMS clients to have up to 10 per cent of their AUM invested in investment-grade, non-convertible unlisted debt securities, subject to client consent.

The move provides portfolio managers with another investment avenue while maintaining limits around risk exposure.

Independent Fund Managers Introduced

Another major change is the introduction of Independent Fund Managers (IFMs).

Under the new structure, independent fund managers will be able to manage client portfolios in association with registered portfolio managers. However, the registered portfolio manager will continue to remain responsible and liable for the activities carried out by the IFM.

Clients will also have a mandatory exit option if their appointed IFM leaves or is terminated.

Why Are These Changes Important For PMS Industry?

The reforms come at a time when the PMS industry has expanded significantly. SEBI’s earlier consultation noted that assets managed by portfolio managers increased from Rs 18.07 lakh crore in April 2019 to Rs 42.61 lakh crore by May 2026.

With larger assets under management and increasing demand for customised investment solutions, SEBI’s latest changes aim to provide portfolio managers with more flexibility while maintaining investor safeguards.

The new framework gives PMS providers access to a wider investment universe, including IPOs, overseas assets, mutual funds and selected unlisted debt opportunities. However, the actual impact will depend on how portfolio managers use these additional investment options 

Disclaimer: The article is for informational purposes only and not investment advice.