PMS vs AIF
Two routes to concentrated, professionally managed equity — with very different structures, minimums and mechanics. Here's how Portfolio Management Services and Alternative Investment Funds compare, side by side.
Direct, individually managed equity portfolio held in your own demat account.
Pooled fund vehicle; you hold units. Can use strategies like long-short or derivatives by category.
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For eligible investors only. PMS minimum ₹50 lakhs; AIF minimum ₹1 crore, as prescribed by SEBI. Not investment advice or a solicitation.
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PMS vs AIF: Which Suits Your Portfolio?
A structured comparison across ownership, minimums, structure, taxation, fees and reporting.
| Feature | PMS | AIF (Cat III) |
|---|---|---|
| Ownership | Securities held directly in your own demat account | Units of a pooled fund; you don’t hold securities directly |
| Minimum investment | ₹50 lakhs (SEBI) | ₹1 crore (SEBI) |
| Structure | Individually managed account | Pooled fund (trust); Category I / II / III |
| Pooling | Not pooled — your own portfolio | Pooled with other investors |
| Instruments | Mostly listed equity, long-only | Cat III may use derivatives / leverage; unlisted in Cat I / II |
| Taxation | Capital gains taxed in your own hands, per security | Cat III taxed at fund level; Cat I / II largely pass-through |
| Liquidity / lock-in | No regulatory lock-in; exit per agreement | Close-ended lock-in for tenure; some Cat III open-ended |
| Fees | Fixed and/or performance-linked fee | Management fee + performance / carry above a hurdle |
| Reporting | Portfolio-level reporting for your account | Fund-level NAV, statements and factsheets |
| Customisation | Some flexibility (restrictions possible) | None — fixed fund mandate |
Minimums and rules per SEBI. Taxation is indicative and depends on current law and instrument mix — consult your tax advisor.
When each tends to fit
Consider PMS if…
Consider AIF if…
PMS vs AIF — FAQs
Common questions on the differences, minimums, taxation and how to choose.
In a PMS, securities are held directly in your own demat account and managed individually. In an AIF, your capital is pooled with other investors into a single fund and you hold units of that fund rather than the underlying securities.
SEBI prescribes a minimum of ₹50 lakhs for PMS and ₹1 crore for AIF. Both are intended for eligible, sophisticated investors.
Because PMS holds securities in your name, capital gains are taxed in your own hands per security. For AIFs, Category III is generally taxed at the fund level, while Category I and II are largely pass-through. Taxation is indicative and depends on current law and instrument mix — consult a tax advisor.
PMS can offer some customisation, such as excluding certain sectors or stocks, depending on the provider and mandate. AIFs follow a fixed, pooled fund strategy with no individual customisation.
PMS generally has no regulatory lock-in and you can exit per your agreement. Close-ended AIFs lock in capital for the fund tenure, while some Category III AIFs may be open-ended with periodic windows.
Category III AIFs may use derivatives and leverage as part of their strategy. A typical PMS is long-only in listed equity, though this varies by provider and mandate.
It depends on your ticket size, tax situation, preference for control versus a pooled structure, and your horizon — not on headline returns alone. Wealth North can help you weigh both against your goals and walk through onboarding for each.