AIFs Outpace PMS on Easier Operations, Tax Structure

Alternative funds’ AUM rose 58% in FY25 to 22.3 tn, while that of PMS grew 19% to 24.3 tn

- Srushti Vaidya

Two of India's asset classes targeting the rich are growing at sharply different rates, with one growing thrice as fast as the other.

Alternative Investment Funds (AIFS) far outpaced portfolio management services (PMS) in FY25, data on fund commitments and assets showed, thanks to a more efficient tax structure, operational ease, and the flexibility to invest in unlisted stocks.

Commitments raised by Category III alternative investment funds grew 58% from a year earlier to 2.3 trillion at the end of March, as per data by the Securities and Exchange Board of India (Sebi).

In the same period, assets under management (AUM) of the PMS industry grew 19% to 4.3 trillion, according to industry body Association of Portfolio Managers in India (APMI).

Here, category III AIFS are compared with PMS schemes as both invest in listed stocks, while category I and category II AIFs invest in unlisted firms.

The minimum investment for AIFs is I crore, while it is 50 lakh for PMS.