India has become one of the fastest-growing economies in the world, and its financial sector has been growing at an unprecedented rate. In recent years, there has been a significant rise in the number of Alternative Investment Funds (AIFs) and Portfolio Management Services (PMS) providers in India.
PMS performance in India and Alternative Investment Fund assets are estimated to exceed 50 lakh crore by 2031. It would take a 20% CAGR increase. According to Mr. Vikas Agrawal, Founder and CEO of AIF & PMS Experts India, these products provide excellent returns, acquire higher penetration, and thrive in a favourable regulatory environment.
These investment avenues have been gaining popularity among HNIs (High Net Worth Individuals), family offices, and institutional investors in India.
In this blog, we shall discuss the current landscape of AIF and PMS investments and their future in India.
Understanding the current landscape:
Alternative Investment Funds (AIFs) are a category of pooled investment vehicles. It invests in assets beyond traditional investments like stocks, bonds, and cash. SEBI or Securities and Exchange Board of India regulates AIFs.
AIFs can be structured as trusts, limited liability partnerships, or companies. AIFs cater to a wide range of investors. It incorporates HNIs, family offices, and institutional investors, and offer them a diversified investment portfolio.
Portfolio Management Services (PMS) are investment management services offered by professional portfolio managers to individual investors or institutional investors.
PMS providers offer personalized investment solutions based on several parameters. These are the investment objectives, risk profile, and investment horizon of their clients. PMS providers are regulated by SEBI and offer investment options in equity, debt, and other securities.
Benefits of investing in AIFs and PMSs:
- Professional investment management services: PMSs and AIF comparison offer professional investment management services to investors. The investment management team manages the portfolio on behalf of the investors, which helps in diversification and risk management.
- Customized investment strategies: AIFs and PMSs offer customized investment strategies based on the investor’s investment objectives, risk appetite, and investment horizon. This ensures that the investment portfolio is aligned with the investor’s goals and objectives.
- Access to alternative asset classes: AIFs and PMSs offer investors access to alternative asset classes, such as real estate, infrastructure, private equity, and venture capital. These asset classes are not easily accessible to retail investors, and investing through AIFs and PMSs can help in diversification and higher returns.
- Transparency and regulatory oversight: AIFs and PMSs are regulated by SEBI, which ensures transparency and regulatory oversight. Investors can access information on the investment portfolio and performance regularly. It helps in making informed investment decisions.
- Potential for higher returns: AIFs and PMSs offer the potential for higher returns compared to traditional investment options such as fixed deposits and mutual funds. The investment management team of the best PMS performance in India uses their expertise to identify investment opportunities. It has the potential for higher returns.
Future of AIF and PMS Investments in India:
Currently, India has more than 500 AIFs and over 400 PMS providers registered with SEBI. The AIF industry has witnessed significant growth in India in recent years.
The total assets under management (AUM) of AIFs growing at a CAGR (Compound Annual Growth Rate) of 28% over the last five years. The AUM of PMS providers has also grown at a CAGR of 21% over the same period.
Views: Investment team of AIF & PMS Experts India:
Given the current status of the sector and recent regulatory advancements, India’s alternative industry is likely to follow the global trend and grab a larger proportion of India’s alternative investment universe.
At the end of June 2022, the PMS market had 13.6 million clients. PMS differs from mutual funds in that all investor inputs are not consolidated into a single scheme.
Instead, funds for each customer are stored in their own demat accounts. It also permits PMS products to be more tailored to the needs of the client.
According to SEBI data, the PMS sector handled Rs. 4 lac crore in client assets at the end of June 2022. This covers assets such as discretionary and advisory services. Non-discretionary assets are ones in which the PMS supplier does not actively manage the portfolio.
The customer makes the investment decisions, and the PMS supplier implements them.
The domain experts are quite excited and many of them think that assets under management of discretionary and non-discretionary PMS would be grown by six times. It would be greater than Rs. 24 lakh crore by 2032.
External factors such as decreased interest rates, information availability, the maturing of developing economies, and a systemic transformation in capital formation all contribute to this rise.6
The future of AIF and PMS investments in India looks bright, and here are some predictions for their growth in the near future:
Increased participation of HNIs and Family Offices:
HNIs and family office for AIF are expected to increase their participation in alternate investments in India. These investors have been looking for diversified investment options beyond traditional investment avenues and are willing to take on higher risks for higher returns.
Focus on ESG investing:
Environmental, social, and governance (ESG) investing is gaining popularity among investors worldwide, and India is no exception. AIF and PMS providers are expected to focus more on ESG investing in the future. These providers would cater to investors’ growing demand for responsible investing.
Rise of tech-enabled investing:
With the rise of fintech and digitalization, AIF and PMS providers are expected to leverage technology to enhance their investment offerings. Tech-enabled investing solutions like robo-advisors, AI-powered portfolio management tools, and mobile investment platforms are likely to gain popularity among investors.
Consolidation of the industry:
The AIF and PMS industry in India is highly fragmented, with many players in the market. In the future, we can expect some consolidation in the industry, with smaller players merging or exiting the market.
The need of an expert guidance:
While the AIF and PMS industries in India are poised for growth, there are also some challenges that need to be addressed. One of the major challenges facing the industry is the lack of investor awareness and education.
Many investors in India are still not aware of the benefits of alternative investments and are hesitant to invest in them. To address this issue, alternate investors should consult professionals to educate themselves. In this scenario, AIF & PMS Experts India Pvt. Ltd. is the best option for them.
They have years of domain knowledge and deep expertise. Therefore, an investing enthusiast can take a correct decision depending on their risk appetite and goals.
End note:
In conclusion, AIF and PMS investments have been gaining popularity among HNIs, family offices, and institutional investors in India. The AIF and PMS industry in India is expected to grow in the near future. If you’re interested in alternate investing, you may reach us to know about the best PMS performance in India.
Interested investors can also contact us at [email protected]. You may reach us directly at 8368586435 for financial advice.