Stories
SEBI Unveils PRIM: A New Era for Portfolio Managers and Mutual Fund Investments
- •SEBI introduces the Portfolio Managers' Route for Investing in Mutual Funds (PRIM), allowing portfolio managers to build client portfolios using mutual funds, ETFs, index funds, and Specialised Investment Funds.
- •The minimum investment ticket size for PRIM is Rs 25 lakh, half of the previous Rs 50 lakh requirement, aiming to expand the PMS industry's reach.
- •PRIM comes with specific regulations: a fee cap of 1 percent of client assets plus performance fees, a maximum 25 percent exposure to affiliated AMCs, and a Rs 2 crore net worth requirement for PRIM-only managers.
- •While PRIM offers a new avenue for asset allocation, it introduces an additional layer of costs for investors, as underlying schemes still charge their own expense ratios.
- •Despite industry concerns about the 1 percent fee cap, PRIM is expected to significantly expand the PMS industry, which has seen assets grow from Rs 18.07 lakh crore to Rs 42.61 lakh crore between April 2019 and May 2026.
Key Questions Answered
PRIM is an overhauled framework introduced by SEBI that allows portfolio managers to build client portfolios utilizing mutual fund plans, index funds, ETFs, and Specialised Investment Funds. Under this route, managers do not select individual stocks but instead act as asset allocators determining scheme mixes and rebalancing.
The minimum ticket size for investors under the PRIM route is Rs 25 lakh, which is half of the standard Rs 50 lakh requirement for regular portfolio management services. Additionally, managers operating exclusively through the PRIM route are required to maintain a net worth of Rs 2 crore.
SEBI has permitted managers to charge fees of up to 1 percent of client assets, alongside performance fees. Furthermore, exposure to affiliated or group asset management companies is capped at a maximum of 25 percent.
