Sebi clears PRIM route with Rs 25 lakh minimum ticket size
The Securities and Exchange Board of India has approved a new route, PRIM or MF-PMS, under which portfolio managers can invest clients' money in direct plans of mutual funds, ETFs, index funds and Specialised Investment Funds. Approved on 24 September 2026, the route sets a minimum ticket size of Rs 25 lakh, a net worth requirement of Rs 2 crore and a fixed management fee capped at 1% of client AUM. Investments in affiliated AMC schemes are capped at 25%. Portfolio managers may also invest in IPOs, primary debt issuances and foreign securities.
Source
Economic Times — Top · read the original report ↗
Desk check · compared with the source
What the desk checked (5)
- Sebi approved a new route, PRIM (MF-PMS), allowing portfolio managers to invest client money in direct plans of mutual funds, ETFs, index funds and SIFs. — Attributed to Sebi approval as stated in the source; figure and scheme details appear in source.
- Minimum ticket size is Rs 25 lakh, net worth requirement Rs 2 crore, fixed management fee capped at 1% of client AUM, performance fee permitted. — All figures appear explicitly in the source's PRIM guidelines listing.
- Investments in schemes of affiliated, group or associate AMCs capped at 25%. — Figure appears in source; no independent verification possible.
- Discretionary PMS may invest up to 10% of client AUM in investment-grade, non-convertible unlisted debt with client consent. — Stated in source and echoed in an attributed quote from APMI chairman Vikas Khemani.
- The measures were approved on 24 September 2026. — Date given in source without citing a specific Sebi document; editor should confirm.
Analysts’ view opinion
PRIM is essentially a fee-compression play dressed as a product innovation: by routing portfolio management services into direct plans of mutual funds, ETFs, index funds and SIFs, Sebi cuts out the distribution commission layer and caps the fixed management fee at 1% of client AUM. The investor who gains is the Rs.25 lakh-plus saver who wants professional asset allocation without paying twice; the party that pays is the distribution chain, whose trail income this route bypasses. The wider mandate — IPOs, primary debt issues, up to 10% in investment-grade unlisted debt, and foreign securities including overseas REITs — is a separate bet, giving managers more return levers but also more complexity to price.
- The economics of PRIM rest on direct plans plus a 1% fixed fee cap, which compresses the total cost stack for clients relative to layered commission-bearing structures.
- The Rs.25 lakh minimum keeps this squarely in the affluent segment, so the near-term flow impact is on high-ticket savings, not mass retail participation.
- The 25% cap on affiliated or group AMC schemes is a conflict-of-interest guardrail with a commercial edge: it limits how much a manager can steer into in-house products.
- Allowing performance fees alongside the capped fixed fee shifts manager revenue toward outcomes, which can align incentives but also raises the question of risk-taking in the search for alpha.
- Permission for IPOs, primary debt, capped unlisted debt and foreign securities widens the fee-earning universe and could channel incremental domestic money into primary markets and overseas assets, though liquidity and valuation risk in unlisted debt sits with the client.
What to watch — Watch how quickly portfolio managers launch separate PRIM investment approaches and whether flows visibly migrate from commission-bearing distribution into direct-plan mandates — that will show whether this is genuine cost reform or a niche add-on.
The story does not establish any figures for expected flows, the number of managers likely to register, the effective all-in cost to investors after performance fees, or an implementation timeline beyond the 24 September 2026 approval date.
Deep dive
Research brief · 8 facts · 1 dates · exam-readyThe brief
Context
India's portfolio management services (PMS) industry manages money for high-net-worth clients, while mutual funds serve retail investors through regular and direct plans. On 24 September 2026, Sebi approved a new route called the Portfolio Managers Route for Investing in Mutual Fund units (PRIM), popularly called MF-PMS, letting portfolio managers build client portfolios entirely out of direct plans of mutual funds, ETFs, index funds and Specialised Investment Funds (SIFs). Alongside PRIM, Sebi widened the investment universe for portfolio managers to include IPOs, primary debt issuances, unlisted debt for discretionary schemes and foreign securities, and created new manager categories such as Independent Fund Managers and Eligible Fund Managers.
Key facts
- Sebi approved PRIM (Portfolio Managers Route for Investing in Mutual Fund units), also called MF-PMS, on 24 September 2026.
- Minimum ticket size under PRIM is Rs 25 lakh, whether offered by an existing portfolio manager or a new PRIM-only registrant.
- Net worth requirement for PRIM is a minimum of Rs 2 crore.
- Fixed management fee under PRIM is capped at 1% of the client's assets under management (AUM); a performance-based fee model is also permitted.
- Investments in schemes of affiliated, group or associate AMCs are capped at 25%.
- Permitted PRIM securities: direct plans of mutual funds, ETFs, index funds and SIFs of Indian asset management companies.
- Discretionary PMS (DPMS) may invest in unlisted debt securities up to 10% of a client's AUM, provided they are investment-grade, non-convertible and the client consents.
- Foreign securities are allowed under both DPMS and NDPMS, covering listed equity, debt, overseas REITs, overseas mutual funds, ETFs, index funds and foreign government debt.
Timeline
- 24 September 2026Sebi approves PRIM/MF-PMS along with other measures: IPO and primary debt market access, unlisted debt for DPMS, foreign securities under DPMS and NDPMS, and the IFM and EFM frameworks.
Who has a stake
- Portfolio managers (PMS industry) — Gain a new product route and a wider investment universe; can offer PRIM via a separate investment approach or seek fresh PRIM-only registration.
- Sebi — As capital markets regulator, must ensure the new route widens access without weakening investor protection, fee discipline or conflict-of-interest safeguards.
- Investors with Rs 25 lakh and above — Access to professionally managed portfolios built only from direct plans, with fees capped at 1% of AUM plus a possible performance fee.
- Asset management companies (AMCs) — Direct plans of their schemes, ETFs, index funds and SIFs become PRIM-eligible, but affiliated-AMC exposure is capped at 25%.
- Mutual fund distributors (MFDs) — Guidelines require segregation of activities and clients between MFD business and PRIM, except for accredited investors.
- Independent Fund Managers (IFMs) — Can manage client portfolios in association with a registered portfolio manager, but only under one portfolio manager, which retains full liability.
- APMI (Association of Portfolio Managers in India) — Industry body; Chairman Vikas Khemani said PRIM widens access and the 10% unlisted debt allowance aids risk-adjusted portfolios.
Why it matters
PRIM creates a regulated middle layer between do-it-yourself mutual fund investing and traditional PMS: a professional manager makes allocation and rebalancing decisions, but invests only in direct plans, with the fixed fee capped at 1% of AUM. The Rs 25 lakh minimum and Rs 2 crore net worth requirement define who can use and who can offer the route, while the 25% affiliated-AMC cap and MFD-PRIM segregation target conflicts of interest. The parallel widening into IPOs, primary debt, unlisted debt and foreign securities significantly reshapes what Indian portfolio managers can hold.
UPSC angle
Prelims pointers
- PRIM = Portfolio Managers Route for Investing in Mutual Fund units, also called MF-PMS; approved by Sebi on 24 September 2026.
- PRIM thresholds: minimum ticket size Rs 25 lakh; minimum net worth Rs 2 crore; fixed fee capped at 1% of client AUM; performance fee allowed.
- Affiliated, group or associate AMC schemes capped at 25% of PRIM investments.
- DPMS unlisted debt exposure capped at 10% of client AUM; must be investment-grade, non-convertible and with client consent.
- A portfolio manager may affiliate with multiple Independent Fund Managers, but an IFM can work under only one portfolio manager.
- Eligible Fund Managers (EFM) Investment Framework covers managing and advising on eligible investments such as overseas securities.
Mains framing
Sebi's approval of PRIM responds to a specific market gap articulated by practitioners: as Dezerv co-founder Sandeep Jethwani put it, the problem is not access to products but the quality and discipline of portfolio management, that is, which funds to own, how much to allocate, when to rebalance and how to stay disciplined through cycles. By channelling portfolio managers exclusively into direct plans of mutual funds, ETFs, index funds and SIFs, PRIM separates advice from distribution commissions, and this is reinforced by the requirement to segregate mutual fund distributor activities and clients from PRIM business except for accredited investors. The regulatory architecture balances access with safeguards: a Rs 25 lakh entry, Rs 2 crore net worth, a 1% cap on fixed management fees and a 25% ceiling on affiliated or group AMC schemes to curb self-dealing. The simultaneous widening of the universe to IPOs, primary debt issuances, investment-grade non-convertible unlisted debt up to 10% of client AUM with consent, and foreign securities including overseas REITs and government debt under both DPMS and NDPMS, gives managers room to build better risk-adjusted portfolios, as APMI Chairman Vikas Khemani noted, while shifting more responsibility onto disclosure and consent. The way forward lies in implementation: tight enforcement of the affiliation cap, clean MFD-PRIM segregation, and clarity that portfolio managers retain full liability for Independent Fund Managers operating under them.
Key terms
- PRIM / MF-PMS
- Sebi's Portfolio Managers Route for Investing in Mutual Fund units, allowing portfolio managers to invest client money only in direct plans of MFs, ETFs, index funds and SIFs.
- Direct plan
- A mutual fund plan bought without a distributor commission; PRIM portfolios must use only direct plans.
- SIF (Specialised Investment Fund)
- A category of fund of Indian AMCs that is a permissible security under PRIM.
- DPMS and NDPMS
- Discretionary and Non-Discretionary Portfolio Management Services; both may now invest in foreign securities, and only DPMS may hold unlisted debt within limits.
- Independent Fund Manager (IFM)
- A manager who can run client portfolios in association with one registered portfolio manager, who retains full responsibility and liability.
- APMI
- Association of Portfolio Managers in India, the industry body whose Chairman is Vikas Khemani.
Practice questions
- What is PRIM (MF-PMS), and how do its ticket size, net worth and fee conditions seek to balance wider investor access with investor protection?
- Sebi has allowed discretionary PMS to invest up to 10% of client AUM in investment-grade unlisted debt and has opened foreign securities to both DPMS and NDPMS. Discuss the opportunities and risks of this widened investment universe.
- Examine how the 25% cap on affiliated AMC schemes and the required segregation of mutual fund distributor and PRIM activities address conflicts of interest in India's portfolio management industry.
Grounded only in the source report — figures and dates are the source's, not inferred.