About a week ago, the Securities Exchange Board of India (Sebi) asked some of them to disclose details related to various schemes as on February 28, 2022 and compare the portfolios of clients within an investment theme (like ‘long only’, ‘high growth’ etc).
“The regulator didn’t say why it wants the information. But the PMS houses were told to submit within a day,” said a compliance official with a fund house.
The information sought by Sebi are: 1) details of assets under management (AUM) and number of clients under discretionary PMS, non-discretionary PMS, and advisory PMS; 2) investment approach wise details of number of clients and AUM; 3) AUM and details of clients who are not covered under any investment approach; and, 4) extent of overlap in portfolio of each client under the same approach.
A Sebi spokesman did not comment on the matter.
A large number of high networth individuals typically choose to put a slice of their money in PMS schemes and alternative investment funds (AIFs) like private equity and venture capital outfits. In discretionary portfolio management service, the portfolio manager manages the funds and securities of each client in accordance with the ‘needs’ of the clients while under ‘non-discretionary’ the portfolio manager manages the funds in accordance with the ‘directions’ of the client.
“Sebi appears to be looking at the strategies being followed by PMS providers… Some PMS providers follow a model portfolio while some also offer a customised portfolio depending on the appetite of investors. Now, portfolios of two clients under the same theme may differ even if they have a similar risk profile,” said an official with a financial intermediary.
