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Portfolio Management Service (PMS) is an investment portfolio in stocks and also fixed income, debt, structured products and other individual securities, managed by professional managers.

An investor in PMS will own individual securities unlike mutual fund investor, who owns units of the scheme or a fund.

Investment solutions provided by a PMS cater to niche segment of clients with investments of INR 50 Lakhs or more.

There are 3 types of PMS: Discretionary, Non-Discretionary and Advisory; however, majority of the Asset Management Companies offer only Discretionary PMS

Alternative Investment Funds (AIF) pool money from sophisticated private investors. Funds collected are invested according to the investment policy of the AIF. Securities and Exchange Board of India’s mutual fund regulations doesn’t govern AIFs. However, AIF in India has its regulation, Regulation 2 (1) (b) of the Regulation Act, 2012 of SEBI. An AIF in India can be established as a company, Limited Liability Partnership (LLP), corporate body, or trust.

AIFs invest in investments that are not traditional (for example, equities or fixed income). Securities and Exchange Board of India classifies AIFs under three broad categories. Namely, Category I AIF, Category I AIF and Category III AIF. Each of the categories has different investments as per the broad definition of the category. Some of them are private equity, venture capital, hedge fund, and angel fund etc.

The minimum investments and fees for AIFs are higher than conventional investments. It is difficult to value an AIF as the asset classes that they invest in are pretty rare. AIFs are illiquid as these investments are open only to limited investors. The transaction costs for AIFs are lower than traditional investments as the turnover is lower. AIFs don’t share any information relating to the fund publicly. Also, AIFs have less opportunity to advertise to potential investors.

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