SEBI allows PMS exposure to foreign securities: What products can clients access?

The Securities and Exchange Board of India (SEBI) has approved a new framework allowing Portfolio Management Services (PMS) to invest in a wider range of foreign securities, potentially giving eligible PMS clients access to overseas markets through professionally managed portfolios.

Under the SEBI (Portfolio Managers) Regulations, 2026, foreign securities will be permitted for both Discretionary Portfolio Management Services (DPMS) and Non-Discretionary Portfolio Management Services (NDPMS). The move is part of SEBI's broader overhaul of the PMS regulatory framework, which replaces the 2020 regulations.

DO READ: Gold, silver ETFs get a new vaulting framework: SEBI raises vault managers' net worth requirement

What can PMS invest in overseas?

SEBI's approved framework specifically lists several categories of foreign securities that portfolio managers can access. These include listed overseas equity, debt securities, REITs, overseas mutual funds, exchange-traded funds (ETFs), index funds and foreign government debt.

This means the permitted universe is not restricted to overseas stocks. PMS managers can potentially construct portfolios combining foreign equities with debt instruments and pooled investment products such as mutual funds, ETFs and index funds, depending on the investment approach adopted for clients.

Foreign REITs are also included in the permitted securities. This provides another route for exposure to overseas real estate markets through listed REIT instruments rather than directly owning physical property.

MUST READ: Sebi may ease margin requirements for longer-tenure F&O products

The framework also includes foreign government debt, allowing PMS portfolios to access sovereign debt securities outside India. Overseas debt exposure could therefore form part of portfolios alongside foreign equity and market-linked investment products.

However, the permission comes with an important regulatory condition. Investments in foreign securities will be governed by the Foreign Exchange Management Act, 1999 (FEMA) and the Reserve Bank of India's Liberalised Remittance Scheme (LRS).

Part of a wider PMS overhaul

The overseas investment provision is one among several changes approved by SEBI to expand the investment flexibility available to PMS managers.

The new rules will also permit PMS managers to invest in IPOs and primary-market debt issuances. Discretionary PMS will additionally be able to invest up to 10% of a client's AUM in investment-grade, non-convertible, unlisted debt securities, subject to client consent.

ALSO READ: SEBI rewrites PMS rulebook, allows IPO, foreign securities and unlisted debt investments

SEBI has also permitted greater flexibility for investments in exchange-traded derivatives, with exposure allowed up to 1.25 times the client's AUM.

The regulator is simultaneously simplifying the PMS rulebook. The new regulations have been reduced from 70 pages to 33 pages, a 53% reduction, while the word count has fallen by approximately 42%.

SEBI said the overhaul is intended to develop the PMS industry, ease compliance and consolidate regulatory provisions. The foreign securities provision therefore represents one part of a broader restructuring of how portfolio managers can manage client assets under the new framework.

DON'T MISS: SEBI's new settlement rules: 90-day window, fast-track route and new penalty formula explained