India’s alternative investment industry, comprising Portfolio Management Services (PMS) and Alternative Investment Funds (AIFs), is on track to surpass the ₹100-lakh crore mark by 2030, according to insights from PMS Bazaar. This remarkable growth reflects a significant shift in how High-Net-Worth Individuals (HNIs) and Ultra-High-Net-Worth Individuals (UHNIs) are diversifying their portfolios.
Key Growth Statistics
- CAGR Growth: Over the last decade (FY14-FY25), PMS and AIFs have grown at a robust compound annual growth rate (CAGR) of 33%, with assets increasing from ₹1 lakh crore to ₹18.87 lakh crore.
- FY25 Status: As of Q1FY25, combined assets of PMS and AIFs have reached ₹87 lakh crore, with:
- ₹7.08 lakh crore in PMS (excluding EPFO contributions and advisory).
- ₹11.79 lakh crore in AIFs, with Category-II AIFs dominating the segment.
Growth Drivers
- Economic Expansion:
- India’s ambition of achieving a $35 trillion economy by 2047 is fueling rapid economic growth.
- Government initiatives and infrastructure investments are driving domestic market development.
- Investor Preferences:
- Rising affluence among HNIs and UHNIs is increasing the demand for personalized and high-yield investments.
- The need for diversification in volatile markets makes alternative investments attractive.
- Regulatory Support:
- SEBI’s stringent regulations ensure that PMS and AIFs remain efficient and investor-friendly, boosting confidence.
- Market Trends:
- Increasing financial literacy and exposure to global investment trends are positioning India as a global financial hub.
Expert Insights
R. Pallavarajan, Founder & Director, PMS Bazaar
“The PMS and AIF sectors symbolize a fundamental shift in how affluent investors approach their portfolios. These vehicles are pivotal for propelling India’s economic and social growth. With the expanding affluent population and a growing need for diversification, the demand for tailored, high-return alternatives is set to surge in the coming years.”
Naveen Kulkarni, CIO, EVP, Axis Securities
“Post-COVID, we’re witnessing a significant shift from traditional equities towards PMS and AIFs. These alternatives offer better risk-adjusted returns, making them increasingly popular. Projections indicate a 3-4x growth in the coming years, solidifying their role in modern investment strategies.”
Future Outlook
With assets projected to grow over fivefold by 2030, the PMS and AIF sectors are set to play a crucial role in India’s financial ecosystem. This trend not only reflects investor confidence but also highlights India’s emergence as a global financial powerhouse.
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