Know about The Major Differences between AIF And PMS

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Know about The Major Differences between AIF And PMS

AIF and PMS There were no explicit rules or laws governing pooled investments before implementing the SEBI Regulations 2012 (“AIF Regulations”). On February 10, 2012, SEBI issued a circular amending the SEBI (Portfolio Managers) Regulations 1993 (the “PM Regulations”) to limit their ability to pool their investors’ funds.
It was done to pave the way for the introduction and implementation of AIF Regulations. These AIF Regulations were introduced to regularise the pooled investment market, and they covered such funds under the legal ambit and mandated registration with SEBI for all such funds.

Difference between AIF and PMS:

AIF and PMS In today’s economy, investors are becoming more aware of various investment options. The habit of wealth management is quickly catching the attention of investors of all sizes. Mutual funds, PMSs, and AIFs are currently the three most popular wealth management routes.

PMS and AIF require higher minimum investments, have higher risk factors, and have a higher probability of higher returns. It is why large and wealthy investors prefer them.

There are numerous distinctions between Portfolio Management Services and Alternative Investment Funds. You may consider that AIFs offer a diverse range of investments, whereas PMSs are primarily focused on listed securities. However, PMS and AIF do exist.

Closed-ended AIF units, for example, can be listed after the scheme or funds’ final close. In contrast, a portfolio is a collection of securities that do not represent a single unique instrument that can be listed.

They differ in many ways, including registration, regulation, capital requirements, categories, investors, investment guidelines, etc.

Below is the table that will help you understand the differences more clearly.

Particulars AIF PMS
Fees Aside from the nonrefundable application fee of Rs. 1,00,000, the applicant must pay the registration fee when a certificate of registration is issued.
The cost of this registration will differ depending on the type of AIF.
Rs. 5,00,000 in Category I
Rs. 10,00,000 for Category II
Rs. 15,00,000 for Category III
Additionally, the nonrefundable application fee of Rs. 1,00,000, the applicant must pay a registration fee of Rs. 10,00,000 when a certificate of registration is issuedm
Registration Validity Registration will be valid until the AIF is closed down. The registration lasts three years. Furthermore, the registration must be renewed at least three months before it expires.
No. of investors The total number of investors in any scheme or fund shall not exceed 1,000 There is no prescribed threshold limit. A Portfolio manager may have an unlimited number of clients.
Fund polling The mainstay of this investment model is the pooling of funds. It is not permitted to pool investor funds. Each client’s portfolio must be kept separate.
Fund segregation There is no need for segregation. The funds of each client are segregated and kept in separate Demat accounts under the PMS model.


Parting note:

The structure of AIF & PMS differs significantly. However, as investor interest in these areas grows, SEBI intends to align the services provided by Portfolio Managers with AIFs. Because both of these investment models involve a high level of risk and the possibility of high returns, the government intends to make them less accessible to small and medium-sized investors.

The lower limit of investment for PMS was raised from 5 lakhs to 25 lakhs in 2003. It is now believed that the Board may raise this limit to Rs. one crore and put both of these models on the same level.

If you are enthusiastic enough to invest in this financial domain, you may reach us at AIF & PMS Experts. We specialise in Alternative Investment Funds and Portfolio Management Services.

Please mail us at [email protected] or Contact us at 8368586435
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