PMS And AIFs: Powering The Next Phase Of India's Wealth Management Evolution

A decisive shift is in full swing within India's wealth management landscape, as sophisticated investors turn towards Portfolio Management Services (PMS) and Alternative Investment Funds (AIFs). These instruments have moved from being niche offerings to mainstream elements of high net worth portfolios, reflecting growing financial maturity and a clear appetite for customisation, diversification, and enhanced risk-adjusted returns.

Decoding The Growth Trajectory

Recent industry data reinforces this structural transition. PMS and AIF assets combined have crossed INR 23 lakh crore as of September 2025, marking remarkable growth in an environment shaped by global uncertainty, rising affluence, and evolving investor expectations.

AIFs have grown from INR 27,484 crore in 2015 to INR 15.05 lakh crore in 2025. The growth is over 49% per annum. Most of this acceleration has come from Category II and Category III funds. Category II AIFs cater to strategies like private equity and private credit, hedge funds, and structured products. Category II AIFs now stand at over INR 11.20 lakh crore, reflecting the growing penchant for long-term conviction-based investing in private markets. Category III AIFs, representing more dynamic and market-linked strategies, have likewise gained and reached almost INR 2.92 lakh crore.

Meanwhile, the PMS industry has also grown considerably. The PMS assets under management have grown from INR 1.27 lakh crore in September 2015 to INR 8.37 lakh crore by September 2025, at a strong CAGR of over 20%. The number of SEBI-registered portfolio managers has also been rising steadily and is now nearing 500, reflecting deeper institutional participation, an increase in strategy diversity, and wider acceptance among high net worth investors seeking customised equity- and multi-asset-led solutions.

Factors Driving Growth - Rising Affluence And GIFT City

A significant catalyst behind the growth of alternatives is India's growing affluent class. The number of individuals with a net worth of more than USD 1 million is expected to reach 19.4 lakh by 2030. This naturally leads to a surge in demand for customised portfolios, sophisticated asset allocation, and the need for access to opportunities outside traditional public markets. In this backdrop, alternatives are increasingly viewed as not just optional exposures but as key constituents required for achieving long-term alpha and portfolio resilience.

A new dimension to this growth story has been added by the IFSC of GIFT City. It is fast turning out to be a preferred gateway for cross-border capital, as commitments to AIF rose from USD 5.5 billion in 2023 to USD 26.3 billion by 2025. Category III funds, supported by feeder structures, have received exceptional traction, crossing more than USD 10 billion by mid-2025. Likewise, inbound investment flows through GIFT have multiplied by over fivefold during the same period, underlining India's growing relevance in global capital markets.

Confronted by growing global market volatility, inflationary pressures, and geopolitical risks, Indian HNIs are moving into structures that can provide diversified sources of return, coupled with professional oversight and a disciplined approach to wealth creation.

With enhanced regulation, better transparency, an expanding manager capability, and India's deepening integration with global markets, the role of PMS and AIFs will become even more influential in the decade to come. The rise of alternatives is no longer a theme; rather, it is a feature that will define modern Indian wealth management.

Disclaimer: This is a sponsored article. All possible measures have been taken to ensure accuracy, reliability, timeliness and authenticity of the information; however OutlookBusiness.com does not take any liability for the same. Using of any information provided in the article is solely at the viewers’ discretion.