PMS & AIF

PMS & AIF: Tailored Investment Solutions for Discerning Investors

As investors seek smarter and more personalized strategies to grow and preserve wealth, Portfolio Management Services (PMS) and Alternative Investment Funds (AIF) have emerged as premium investment options tailored for high-net-worth individuals (HNIs).

Portfolio Management Services (PMS)

PMS offers professional management of your equity and debt portfolio by certified fund managers. Unlike mutual funds, PMS portfolios are customized as per the client’s financial goals, risk appetite, and investment horizon. The investor holds securities directly in their demat account, allowing for transparency and control.

Discretionary PMS:

• The portfolio manager has the full authority to make investment decisions on behalf of the client.
• Suitable for clients who want professional management without getting involved in day-to-day decisions.

Non-Discretionary PMS:

• The portfolio manager advises the client, but the final investment decision rests with the client.
• Suitable for clients who want guidance but control their own investments.

Advisory PMS:

• The manager provides recommendations only, without holding the assets or executing trades.
• Suitable for high-net-worth individuals who want expert advice but prefer to manage execution themselves.

Alternative Investment Funds (AIF)

AIFs pool capital from sophisticated investors and invest in non-traditional asset classes such as private equity, venture capital, hedge funds, and structured credit. Regulated by SEBI, AIFs are categorized into three types:

Category I AIF (Alternative Investment Fund):

Category I AIFs are funds that invest in start-ups, early-stage ventures, social ventures, SMEs, or infrastructure projects. They are considered low-risk from a regulatory standpoint because they promote socially or economically desirable sectors.

• Examples: Angel funds, venture capital funds, SME funds, infrastructure funds.
• Key point: They often get tax incentives and are encouraged by the government to boost growth in priority sectors.

Category II AIF (Alternative Investment Fund):

Category II AIFs are funds that invest in sectors or strategies not covered by Category I and do not take excessive leverage. They aim for financial returns rather than social or economic objectives.

• Examples: Private equity funds, debt funds, fund-of-funds.
• Key point: These funds cannot receive government incentives like Category I but are used for diversified investment strategies.

Category III AIF (Alternative Investment Fund):

Category III AIFs are hedge funds or funds that employ complex strategies, including leverage, derivatives, and arbitrage, to generate high returns in the short term.

• Examples: Hedge funds, PE funds using derivatives, structured credit funds.
• Key point: These are high-risk, high-return funds suitable for sophisticated investors.