Equity assets under PMS schemes jump 30% on year in Jan-Dec 2016

My recent contribution:

[C] Equity assets under PMS schemes jump 30% on year in Jan-Dec 2016

Cogencis, Monday, Jan 30

    By Rajesh Gajra

    NEW DELHI - Equity assets of portfolio managers registered with Securities and Exchange Board of India under the SEBI (Portfolio Managers) Regulations have been growing at a rapid pace in the last couple of years.

    And, the pace quickened in the Jan-Dec 2016 period as compared to the year ago period, an analysis of discretionary assets under management data released by Securities and Exchange Board of India showed.

    This indicates rising preference of high networth investors to invest in equities through the portfolio managers under their portfolio management schemes as the minimum investment size in these schemes is Rs 25 lakh and the investment strategies are specialised in nature.

    Total discretionary assets of portfolio managers in listed equity shares recorded a sharp rise of 30.1% to 620 bln rupees as of Dec 31 2016, compared to a year ago. This surge was more than the 4.1% rise seen in the same period in movement of the equity benchmark index, Nifty 50.

    In the Jan-Dec period of 2015, discretionary equity assets under portfolio managers had recorded a high rate of growth, with the corpus of 477 bln rupees as of Dec 31 2015 being 25.2% more than a year ago. This growth took place when the Nifty 50 actually recorded a decline of 4.1% in the same period.

    In contrast, the discretionary debt assets corpus of portfolio managers saw a lower growth rate of 17.1% in the Jan-Dec period of 2016 (see table).

    The debt funds corpus of portfolio managers comes predominantly from the funds of employees provident fund organization and various provident funds.

    Portfolio managers are allowed to invest on behalf on private clients under the SEBI regulations with a minimum investment ticket size of Rs 25 lakh per client, unlike mutual funds which solicit investment funds from public investors.

    Portfolio managers' assets under management are typically of two types--discretionary and non-discretionary.

    Under the discretionary mode, the clients authorize the portfolio to invest in any instrument or asset class under broad investment objectives specified in the fund prospectus. Under the non-discretionary category the clients direct the portfolio manager to invest their funds into specific instruments.

    As of Dec 31 2016, the total non-discretionary assets of portfolio managers in listed equities stood at 114 bln rupees.

DISCRETIONARY AUM UNDER PMS                           

                                    Dec 2016    Dec 2015          Dec 2016      Dec 2015

                               Assets under management         On-year change    

                                        (Rs billion)                           (per cent)      

Listed equities                620             477                    30.1             25.2

Plain debt                     8320           7107                    17.1             19.0

Mutual funds                   86               62                     38.1             23.7

Total*                           9201           7845                    17.3             18.4

- of which EPFO/PFs   8210          7083                     15.9            18.2

* across all asset classes and instruments

Source: Securities and Exchange Board of India