Why HNIs Are Moving Beyond Mutual Funds: The Rise of AIFs and PMS Strategies in India

As the Indian investment landscape evolves, a clear trend has emerged among High Net-Worth Individuals (HNIs) a strategic shift from traditional mutual funds to more tailored and conviction-driven investment vehicles like Alternate Investment Funds (AIFs) and Portfolio Management Services (PMS).

According to a recent article by Fortune India, this migration is not a passing phase but a reflection of deeper market maturity, increased risk appetite, and the growing preference for differentiated, actively managed strategies.

What’s Driving the Shift?

1. Tailored Portfolios with Higher Conviction
   HNIs increasingly seek portfolio strategies aligned with their unique risk-return expectations. PMS and AIFs offer the flexibility to invest in high-conviction, theme-based opportunities ranging from special situation funds to sector-specific bets something traditional mutual funds seldom provide.

2. Lower Volatility, Higher Alpha
   Unlike broad-based mutual funds, AIFs and PMS products are managed with sharper focus, often adopting concentrated portfolios and longer investment horizons. This approach helps in generating alpha and insulating portfolios from short-term market noise.

3. Access to Unique Opportunities
   AIFs, particularly in Categories II and III, offer access to pre-IPO equity, unlisted debt, structured credit, and even distressed asset opportunities asset classes largely inaccessible through mutual funds.

4. Customized Wealth Management
   HNIs prefer strategies that integrate with their broader estate, tax, and succession planning frameworks. PMS providers and AIF managers often offer advisory overlays and more active hand-holding compared to the relatively standardized mutual fund ecosystem.

RURASH Financials’ Perspective

At RURASH, we recognize that today’s evolved investor expects more than market-linked returns they seek insight, innovation, and intent. Our curated suite of AIFs and PMS offerings cater to HNIs, NRIs, and family offices looking to diversify beyond conventional avenues.

Whether it is long-only equity strategies, tactical debt allocation, or differentiated alternative themes, our investment team partners only with SEBI-registered, performance-backed fund managers to ensure our clients benefit from quality and transparency.

Risk Comes with Reward But So Does Expertise

While AIFs and PMSs offer enhanced return potential, they also come with inherent risks, including liquidity constraints, concentration, and market volatility. This makes due diligence, manager selection, and continuous performance tracking absolutely critical areas where RURASH’s investment desk brings deep research and operational rigour.

Conclusion

The move away from mutual funds is not just about returns it’s about control, customization, and clarity. For HNIs looking to align their capital with conviction-led strategies, AIFs and PMSs represent the next frontier of personalized wealth creation.

To explore how we can help you diversify your portfolio with high-conviction alternative investments, connect with our advisory team today.