2-3 crore investors could enter PMS under PRIM: Sandeep Jethwani

As many as 2-3 crore Indian wealth creators could become eligible for the portfolio management ecosystem under SEBI's new PRIM framework, said Dezerv co-founder Sandeep Jethwani. He estimated this segment holds mutual fund portfolios worth Rs 25-50 lakh. PRIM lowers the entry point to Rs 25 lakh from the Rs 50 lakh minimum, caps fees at 1% and carries no exit loads. It allows portfolios built from direct mutual funds, ETFs, index funds and SIFs.

Written by AI from Economic Times — Markets · not yet reviewed by an editor · Published 27 Sept 2026, 3:59 pm IST

Source

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#pms#sebi#prim#mutual funds#wealth management#investing

Desk check · some claims need care

What the desk checked (5)

2-3 crore Indian wealth creators could have mutual fund portfolios of Rs 25-50 lakh and become eligible for the PMS ecosystem under PRIM. — Attributed to Sandeep Jethwani as an estimate by his firm; no external data cited in the source.
PRIM lowers the PMS entry point to Rs 25 lakh from the Rs 50 lakh minimum, with fees capped at 1%, no exit loads and a 25% cap on group AMC schemes. — Figures appear in the source as described by the interviewee; framework details not independently attributed to a SEBI document in the text.
PMS managers will be allowed exchange-traded derivatives exposure up to 1.25 times client AUM. — Figure appears in the interview question and answer; no SEBI circular cited.
SEBI has proposed an Independent Fund Manager framework, with fees routed to the registered portfolio manager and a central database maintained by APMI. — Described as a SEBI proposal in the source; stated by the interviewee without documentary citation.
SEBI has allowed ratings verified by the Past Risk and Return Verification Agency in advertisements. — Stated in the source by the interviewee; no regulatory reference provided.

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Analysts’ view opinion

AI Economic Analyst

By halving the PRIM entry point to Rs 25 lakh and capping fees at 1% with no exit load, the framework opens professional portfolio management to a large upper-middle savings cohort that was previously priced out. The 2-3 crore figure is one industry participant's estimate of the addressable market, not evidence of actual demand. Economically, this does not create new savings; it reorganises the fee and advice layer sitting on top of money already in mutual funds.

On costs, direct plans and no exit loads favour the investor, but a management fee of up to 1% is an added layer — the net benefit depends on whether better allocation and discipline outweigh it.
The clearest gainers are portfolio managers and wealth platforms, while the traditional distributor-commission model faces fresh competitive pressure.
Investors with Rs 25-50 lakh portfolios sit in the middle of the wealth pyramid and tend to be fee-sensitive, so price competition below the 1% cap is plausible.
Permission to hold foreign securities can reduce single-market and single-currency risk, including rupee depreciation, but adds currency and tax complexity that carries its own cost.
Derivatives exposure of up to 1.25 times client AUM can support returns yet raises margin and liquidity risk in stressed markets — a point the story itself flags.

What to watch — Watch actual take-up over the next few quarters: account numbers and AUM flowing into PRIM, and whether competition pushes fees below the 1% ceiling.

The 2-3 crore number is an industry estimate of eligibility, and the story does not establish how many will convert or that PRIM portfolios will outperform self-managed ones.

Deep dive

Research brief · 8 facts · 4 dates · exam-ready

The brief

Context

SEBI has created a new licence category called PRIM (portfolio management of mutual funds) that lets portfolio managers build discretionary portfolios out of direct-plan mutual funds, ETFs, index funds and Specialised Investment Funds, with a minimum investment of Rs 25 lakh instead of the Rs 50 lakh floor for traditional PMS. In an ETMarkets Smart Talk interview, Dezerv co-founder Sandeep Jethwani argues this could bring 2-3 crore Indian wealth creators into the portfolio management ecosystem. Alongside PRIM, SEBI is widening standard PMS into foreign securities, unlisted debt and exchange-traded derivatives, and has proposed an Independent Fund Manager (IFM) route. Jethwani also argues investors should judge PMS on drawdowns and risk-adjusted consistency rather than one-year returns.

Key facts

Jethwani estimates 2-3 crore Indian wealth creators hold mutual fund portfolios between Rs 25 lakh and Rs 50 lakh, the segment PRIM targets.
PRIM opens at a Rs 25 lakh minimum, against the Rs 50 lakh minimum under the existing PMS framework built for stock portfolios.
PRIM design features: direct plans only, fee capped at 1%, no exit loads, and a 25% cap on group AMC schemes.
PRIM portfolios can be built from direct mutual funds, ETFs, index funds and SIFs.
Indian investors choose from over 2,000 mutual fund schemes, making self-directed selection difficult, per Jethwani.
PMS managers get exchange-traded derivatives exposure of up to 1.25 times client AUM, which Jethwani calls a ceiling, not a target.
SEBI is enabling PMS investment in foreign securities including overseas equities, debt, REITs, mutual funds, ETFs, index funds and foreign government debt.
Under the proposed IFM model, fees go to the registered portfolio manager, orders run through its systems, clients get an exit if the IFM leaves, and APMI will maintain a central database.

Timeline

Until now (pre-PRIM)Managers building mutual fund portfolios worked within the PMS framework designed for stock portfolios, at a Rs 50 lakh minimum; investors accessed global markets via capped international funds or LRS on their own.
Current SEBI movesPRIM licence created at Rs 25 lakh entry; PMS allowed foreign securities, unlisted debt and derivatives up to 1.25x AUM; ratings verified by PaRRVA allowed in advertisements.
ProposedIndependent Fund Manager framework, under which managers run strategies in association with a registered portfolio manager.
Next three to five yearsJethwani expects the addressable base and industry to widen at both ends, to be judged by client outcomes and retention, not only AUM.

Who has a stake

SEBI — Designing an investor-first framework — fee caps, direct plans, no exit loads, disclosure — while widening the PMS investment universe without importing excess risk.
Investors with Rs 25-50 lakh mutual fund portfolios — Gain access to discretionary professional portfolio management, allocation discipline and overlap/rebalancing oversight at capped 1% fees.
Portfolio managers and PMS platforms — A much larger addressable market, but new obligations on exposure limits, stress testing, margin planning, disclosure and due diligence on onboarded IFMs.
Independent fund managers — Can run own strategies without building compliance, operations, dealing, reporting and custody from scratch, hosted by a registered portfolio manager.
Mutual funds, SIFs and AIFs — Become 'ingredients' competing for allocation, with portfolio managers deciding allocation on the client's behalf.
APMI and PaRRVA — APMI to maintain a central IFM database; PaRRVA-verified risk-return ratings permitted in advertisements.

Why it matters

Lowering the discretionary portfolio management threshold to Rs 25 lakh with a 1% fee cap potentially moves professional, whole-portfolio advice from the very rich to India's broad mass-affluent base. It shifts the industry's problem from access to mutual funds — which is now easy — to disciplined allocation, overlap control, rebalancing and staying invested through cycles, where retail investors typically lose returns. The parallel opening of foreign securities, derivatives and independent managers also raises the bar on risk management and disclosure.

UPSC angle

Prelims pointers

PRIM: SEBI's separate licence for portfolio management of mutual funds; Rs 25 lakh minimum, fee capped at 1%, no exit loads, 25% cap on group AMC schemes, direct plans only.
Standard PMS minimum investment: Rs 50 lakh; PRIM entry point: Rs 25 lakh.
PMS exchange-traded derivatives exposure permitted up to 1.25 times client AUM.
PRIM investment universe: direct mutual funds, ETFs, index funds and SIFs (Specialised Investment Funds).
Independent Fund Manager (IFM): proposed route to manage client portfolios in association with a registered portfolio manager; APMI to maintain a central database.
PaRRVA — Past Risk and Return Verification Agency — verified ratings allowed in advertisements.

Mains framing

India's deepening mutual fund base has created a large mass-affluent cohort — an estimated 2-3 crore investors with Rs 25-50 lakh portfolios — for whom access to funds is no longer the constraint; constructing a coherent portfolio from over 2,000 schemes and staying invested through drawdowns is. SEBI's PRIM framework responds by giving mutual fund portfolio management its own lighter licence at a Rs 25 lakh entry, with investor-first guardrails: direct plans, a 1% fee cap, no exit loads and a 25% ceiling on group AMC schemes, which limits both cost leakage and conflict of interest. Simultaneously, standard PMS is being widened into foreign securities, unlisted debt, derivatives up to 1.25x AUM and the proposed Independent Fund Manager route, which separates investment talent from compliance and custody infrastructure while keeping fees, order flow and liability with the registered entity. The implications cut both ways: broader access and more specialised strategies, but also risks of leverage creep, currency and tax complexity in global allocations, and platform-level due diligence failures. The way forward, as argued in the interview, is to treat exposure caps as ceilings rather than targets, insist on daily gross-net exposure monitoring, stress testing, margin-liquidity planning and plain-language disclosure, and shift industry evaluation from one-year returns to verified risk-adjusted metrics — drawdown depth, recovery time and rolling-period consistency — with success measured by client outcomes and retention rather than AUM alone.

Key terms

PRIM: SEBI's new framework giving portfolio management of mutual funds its own licence, opening at Rs 25 lakh with a 1% fee cap and no exit loads.
PMS (Portfolio Management Service): Arrangement where the investor owns the portfolio directly in their own name with full visibility of holdings; standard minimum Rs 50 lakh.
SIF (Specialised Investment Fund): Pooled vehicle that can run strategies a long-only mutual fund cannot; permitted in PRIM portfolios.
Independent Fund Manager (IFM): SEBI-proposed role letting a manager run client portfolios in association with a registered portfolio manager that provides operations and carries responsibility.
PaRRVA: Past Risk and Return Verification Agency, whose verified ratings SEBI now allows in advertisements.
LRS: Liberalised Remittance Scheme route through which Indian investors previously invested abroad on their own.

Practice questions

Critically examine how SEBI's PRIM framework changes the economics of professional portfolio management for India's mass-affluent investors. What risks accompany the wider PMS investment universe?
'Funds compete for allocation; the portfolio manager decides the allocation.' Discuss the distinct role of PMS relative to mutual funds, SIFs and AIFs in India's wealth-management ecosystem.
Should regulatory disclosure shift from one-year returns to verified risk-adjusted measures such as drawdowns and recovery periods? Argue with reference to investor behaviour during market corrections.

Grounded only in the source report — figures and dates are the source's, not inferred.

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