PMS, AIF assets to surpass Rs 100-lakh crore mark by 2030: PMS Bazaar

Assets managed by the Indian alternative investment industry, comprising Portfolio Management Services (PMS) and Alternative Investment Funds (AIFs), is set to cross the Rs 100-lakh crore mark by 2030, as per PMS Bazaar.

The PMS and AIF sectors have been growing at an impressive compound annual growth rate (CAGR) of about 33%, with assets rising from around Rs 1 lakh crore to Rs 18.87 lakh crore over the last decade i.e. FY14-FY25.

As of FY25 (data up to Q1FY25), combined assets of PMS and AIFs have reached Rs 87 lakh crore, comprising Rs 7.08 lakh crore in PMS (excludes EPFO contribution and advisory) and Rs 11.79 lakh crore in AIFs, with Category-II AIFs holding the lion’s share.

According to PMS Bazaar estimates, India’s rapid economic growth, fuelled by government initiatives, domestic market expansion, and infrastructure investments, has created an environment ripe for alternative investments. It said, “As India aspires to have $35 trillion economy size by 2047 and enters its next phase of rapid development, PMS and AIFs are increasingly becoming the vehicle of choice for HNIs and UHNIs, seeking more personalised and higher-yielding investment options. If this growth trajectory continues, the overall industry is projected to surpass Rs 100 lakh crore by 2030, marking an over 5-fold increase in just 6 years. The potential for growth in the longer term depends on sustained growth, economic conditions, and investor interest.”

Sebi has been strengthening regulations for both PMS and AIFs, ensuring that these products become more efficient and investor-friendly, thereby enhancing their appeal in the market.

R. Pallavarajan, Founder & Director, PMS Bazaar, commented, “The growth of PMS and AIFs reflects a fundamental shift in how India’s affluent investors approach their portfolios. The demand for tailored, high-return alternatives is expected to grow substantially in the coming years. These investment vehicles are pivotal in propelling India’s economic growth, social progress, and governance, aligning with the government’s growth vision as well. Key factors driving this growth include investors’ increasing need diversification, and the expanding affluent population.”

The rise of PMS and AIFs in India is driven by factors such as increasing affluence, rising financial literacy, regulatory support, a thriving growth ecosystem, and a demand for diversification to mitigate risks, especially volatile markets, creating an ideal environment for their growth among HNIs and UHNIs. These trends position India as a global financial hub with lucrative investment opportunities.

Naveen Kulkarni, CIO, EVP, Axis Securities says “The traditional equities industry, dominated by mutual funds, is experiencing a significant shift towards alternative investment structures such as Portfolio Management Services (PMS) and Alternative Investment Funds (AIF). These alternatives are gaining traction due to their potential for better risk-adjusted returns, especially in the post-COVID landscape. Projections suggest that it could see a 3-4x increase in the coming years. This trend underscores that alternatives are not just the future—they are rapidly becoming the present.”