The Portfolio Management Services (PMS) industry has witnessed tremendous growth over the past few years as assets under management have grown manifold. However, PMS lags in terms of standardised reporting and transparency in terms of fees and charges. To address this, Sebi formed a working group to review PMS regulations. It proposed some key changes, which include increasing minimum capital requirement for portfolio manager from Rs 2 crore to Rs 5 crore. It also proposed to increase minimum investment to Rs 50 lakh from Rs 25 lakh. To address non-standardised reporting of returns by different portfolio managers, it is proposed that time weighted rate of return be used and all performance be reported net of fees, all expenses and taxes. Also, performance is to be reported to clients every quarter against six months earlier.
Just like mutual funds, it is also proposed that distributors be paid on a trail basis and no upfront fees to be charged from the client. The report has been opened for public comment.