ALTERNATIVE INVESTMENT OPTIONS EXPANDING INVESTMENT HORIZONS

Shifting paradigms and a changing investment landscape are creating a fecund environment for high networth individuals (HNIS) to rethink their portfolio allocations and increase exposure to innovative investment solutions.

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Two such compelling investment vehicles that are gaining traction among the tribe of HNIs are Portfolio Management Services (PMS) and Alternative Investment Funds (AIFs). This rising interest is exemplified by the growth of the alternative industry. The Indian alternative investment market currently boasts an asset size of ₹12 trillion (₹12 lakh crore), with approximately ₹5 trillion (₹5 lakh crore) managed by PMS providers and around ₹7 trillion (₹7 lakh crore) overseen by AIFS.

More than the basic

PMS is basically an offering that enables investors to utilise the expertise of skilled investment professionals who manage their equity portfolio. AIF, on the other hand, is a pooled investment vehicle that invests in a range of alternative investments, defined as investments that are different from traditional asset classes like pure debt or equity. The market offers a wide range of PMS schemes and three distinct categories of AIFs. Category I AIFs focus on investing in start-ups, small and medium-sized enterprises (SMEs), and social ventures. Category II AIFs are close-ended private equity, real estate, or special situation funds that primarily invest in unlisted companies. On the other hand, Category III AIFs employ complex investment strategies to invest in both listed and unlisted securities. While the minimum investment limit for PMS stands at ₹50 lakh, it increases to ₹1 crore for AIFS.

Distinct advantages of investing in PMS and AIFS