India’s wealth management landscape is evolving rapidly, and high-net-worth individuals (HNIs) are no longer relying solely on traditional mutual funds or stocks. Instead, they’re exploring Portfolio Management Services (PMS) and Alternative Investment Funds (AIFs)—two premium investment vehicles that offer tailored strategies, exclusivity, and access to high-growth opportunities. But with both PMS and AIFs competing for the same pool of sophisticated capital, the question is: Which one is winning the wealth game in 2025—and why?
Portfolio Management Services (PMS)
PMS is a customized investment portfolio managed by professional fund managers on behalf of clients.
Investors directly own the underlying securities (stocks, bonds, etc.).
Minimum investment: ₹50 lakh
Types: Discretionary, Non-discretionary, Advisory
Common among equity-focused HNIs seeking personalized stock portfolios.
AIFs are pooled investment vehicles that invest in alternative asset classes like private equity, venture capital, hedge strategies, or structured debt.
Investors buy units of a fund, similar to mutual funds, but with higher risk/return potential.
Minimum investment: ₹1 crore
Categories:
Category I: Startups, social ventures, infrastructure
Category II: PE, debt funds, real estate
Category III: Hedge funds, long-short strategies
PMS on the Rise Among Equity Enthusiasts
High-net-worth individuals are favouring multi-cap and thematic PMS portfolios that offer direct equity exposure with expert management.
PMS providers like Motilal Oswal, ASK Wealth, and Marcellus are seeing strong inflows.
Investors value transparency, control, and performance accountability.
Ultra-rich investors are turning to AIF Category II and III funds for access to:
Private equity & VC-style returns
Structured credit strategies
Long-short hedge fund strategies
Managers like Avendus, True North, Edelweiss, and IIFL are expanding their AIF offerings.
PMS: Top-performing strategies have delivered CAGR returns of 15–18% over 3–5 years.
AIFs: Depending on the strategy, returns range from 12% (debt funds) to 25%+ (VC/PE strategies), though risk and illiquidity are higher.
Choose PMS if:
You want more control and transparency.
You prefer listed equity exposure.
You value liquidity and frequent reporting.
Choose AIFs if:
You are open to a longer investment horizon.
You want to access private deals or hedge strategies.
You’re okay with limited liquidity for higher returns.
In 2025, most wealth managers are recommending a hybrid strategy:
PMS for market-linked growth + customization
AIFs for alternative alpha and diversification
The goal is to blend both to balance risk, optimize tax, and access new-age opportunities beyond traditional instruments.
PMS and AIFs aren’t rivals—they’re complementary. For HNIs and ultra-HNIs in India, the real winner in the wealth game is a well-structured portfolio that uses both vehicles strategically.
With the right mix of equity conviction and alternative exposure, investors in 2025 are building smarter, future-proof wealth strategies beyond mutual funds and market noise.