PMS and AIFs: India’s Alternative Investment Revolution Hits ₹23 Lakh Crore
India’s alternative investment landscape, comprising Portfolio Management Services (PMS) and Alternative Investment Funds (AIFs), has reached a pivotal moment, with combined assets surpassing ₹23 lakh crore as of September 2025.1 This historic growth—a 31.24% compounded annual growth rate (CAGR) over the past decade—signals a structural shift, moving alternatives from a niche product to a central pillar of portfolio construction for rich and sophisticated investors.2
The Good News: Explosive Growth and Maturation
The alternatives space has delivered extraordinary growth, fueled by the rising affluence of Indian HNIs and a demand for alpha-focused, uncorrelated strategies amidst global volatility.3
| Segment | Assets (Sept 2015) | Assets (Sept 2025) | 10-Year CAGR | Key Driver |
| Combined Alternatives | ₹1.54 lakh crore | >₹23 lakh crore | 31.24% | Overall market maturation |
| AIF Commitments | ₹27,484 crore | ₹15.05 lakh crore | 49.23% | Exponential growth in private capital |
| Category II AIFs | ₹14,707 crore | ₹11.20 lakh crore | 54.24% | Dominant growth in PE/VC/Real Estate |
| PMS Assets | ₹1.27 lakh crore | ₹8.37 lakh crore | 20.75% | Structured wealth management demand |
As R Pallavarajan, founder and director of PMS Bazaar, notes, this rise reflects a “conscious and sophisticated move toward performance-oriented investing” by the ultra-rich and HNI base.
The Bad News: Caution and Decline in Inflows
A day after the positive growth report, data showed an immediate concern: PMS recorded its sharpest monthly decline of FY26 in September.
Plunge in Inflows: Net PMS inflows plummeted 92% to just ₹1,139 crore in September, down from ₹14,789 crore in August.4
HNI Sentiment: This plunge was largely attributed to a sharp deterioration in discretionary PMS—considered the clearest gauge of HNI (high net worth) sentiment.5 Inflows into discretionary PMS fell from nearly ₹34,000 crore to just over ₹19,000 crore between August and September.
Policy Demands and Regulatory Relief 📜
In a bid to sustain long-term growth and make the segment more competitive, PMS managers have raised key policy demands and received important regulatory relief.
| Area | Industry Demand/Concern | SEBI Action/Reform |
| Benchmark Fees | PMS managers want SEBI to reduce or remove fees paid for index benchmarking (Nifty/Sensex), arguing the data is public and a burden on smaller firms. | Demand is pending. |
| Business Transfer | No prior issue. | SEBI recently allowed the transfer of PMS businesses (must be concluded within two months of approval), a huge boon for flexibility and consolidation. |
| IPO Access | Mutual Funds’ restriction from non-anchor/institutional IPO quotas. | Enhanced PMS Appetite: This restriction has created a clearer runway for PMS and AIFs to build pre-listing positions and invest in unlisted shares, capitalizing on the booming primary market. |
The Future Frontier
George Heber Joseph, CIO and CEO (Equity) at ASK Investment Managers, highlights that this surge is being driven by “new-age investors, startup founders, senior professionals, and growing participation from Tier II and III cities.”6 The data suggests that India’s alternative growth story, powered by affluence and clearer regulations, is only in its early stages, emerging as the “next frontier of professional investment management.”7
Explore Alternative Strategies
For deeper understanding of the the , or the strategies employed by (the largest contributor to AIF growth), explore perspectives from Ranjit Jha (CEO) — known for research-driven, long-term financial analysis.
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