SEBI Chief urges accountability in portfolio management services

Sebi Chief Tuhin Kanta Pandey said that the PMS industry must curb misleading claims by few portfolio managers and that the industry needs to modernise onboarding, reporting, and client engagement through digital solutions to stay competitive and trusted in the market.

While speaking at Association of Portfolio Managers in India (APMI) annual conclave on Wednesday he said, “PMS industry is at an inflection point. You have a powerful position in place, a flexible regulatory framework, active industry engagement through the Association and a rising pool of informed investors. The association and the industry must curb misleading claims being made by a few registered portfolio managers. Such exaggerated performance claims undermine trust and could stall growth of this industry.”

He also said that it must be ensured that clients understand the risk-return trade-offs, the bespoke nature of the mandate and the advantage of directly owning underlying securities, benefits that pooled products may not match. Pandey emphasised there is growing demand for customised wealth management outside of the traditional mutual fund space that reflects investor sophistication today. The number of registered portfolio managers rose from 361 at the end of FY21 to 479 as of June 30, 2025, showing steady ecosystem growth while maintaining quality.

During the same period, the total client base grew at 12% CAGR with discretionary PMS clients growing at 13% annually and now making up about 96% of all clients. Discretionary AUM, grew 23% annually, indicating increased client preference to delegate active management of their portfolios. This AUM also makes up over 40% of the organically sourced AUM, a sign of client trust in the industry. Non-discretionary and advisory client counts have declined, but their AUMs have risen. This has indicated that substantial PMS client relationships still exist in these categories.

This growth comes with a mandate to maintain trust and professional conduct. He said, "PMS's edge is its flexibility in delivering tailor-made strategies, but the industry must demonstrate that customisation is a consistent capability, not just a slogan", he added.

Lastly, he said the sustained growth of PMS will depend on innovation, process strengthening, technology investment and keeping clients' interests central. “As APMI enters its fourth year, we at SEBI remain committed to shaping a forward-looking regulatory framework that exemplifies collaboration and innovation”, he added.