Anybody who is planning to invest in mutual funds or has been investing in direct mutual funds knows the overall process, if not in detail. The investor picks a couple of schemes, starts his/her SIP and keeps adding money to the schemes every month or week as per his/her convenience. 

Though the investor may be disciplined, he/she may not know to rebalance their portfolio properly and may panic during market correction. 

If they do not have the time to do that, it is better to trust a professional who is a registered Portfolio Management Service (PMS). Having said that the minimum deposit for availing PMS in India is Rs 50 lakh and this would not be feasible for a lot of investors as the initial capital is huge. 

So, the market regulator, SEBI, announced a third alternative on 24 September 2026. The regulator’s board has approved PRIM (the Portfolio Managers Route for Investing in Mutual Fund Units) which is also known as MF-only PMS. In this blog, we will discuss how it works, its costs and who can invest through this route.

What Is SEBI’s MF-Only PMS?

According to the rules of PRIM, registered portfolio managers can invest client money in direct plans of mutual funds including ETFs, thematic funds, index funds and Specialised Investment Funds (SIFs) offered by Indian asset management companies. 

The money does not go into stocks and bonds directly. The money collected from customers will be invested only through mutual fund schemes. The portfolio manager will not select any stocks, since that stays with the underlying fund managers of the scheme. 

What changes is who decides which schemes you will buy or own and how much goes into each scheme. The portfolio manager may also decide how much to allocate in different schemes and when to move the money with respect to reallocation. It is an extra layer of decision-making above the fund manager and PRIM brings that layer into the regulated PMS framework.

SIFs are a newer product tier above regular mutual funds. They allow more flexible strategies and are aimed at higher-ticket investors. While the minimum ticket size is Rs 10 lakhs for SIFs, the minimum investment through PRIM is Rs 25 lakhs which is lower than the traditional PMS route where the minimum investment amount is Rs 50 lakhs.

There are two ways to offer PRIM. An existing portfolio manager can offer this as a separate investment approach to their clients. A new applicant, who wants to operate strictly within the PRIM framework, can obtain a fresh registration.

How did PRIM come into effect

The market regulator, SEBI, mooted the idea of MF-only PMS through a consultation paper on 23 July 2026. It was part of a review of the Portfolio Managers Regulations, 2020. SEBI wanted public comments and opinions regarding the same and the public had time till 13 August 2026 to give their feedback. 

And, at the 215th meeting in Mumbai, the SEBI board approved the SEBI (Portfolio Managers) Regulations, 2026, which will replace the 2020 rules. The fee cap came down to 1% from 2.5% which was mentioned in the draft. 

The timing of SEBI makes sense because PMS assets have grown from Rs 18.07 lakh crore in April 2019 to Rs 42.61 lakh crore in May 2026, according to various media reports. The number of registered portfolio managers has also risen from 226 to 515 during the same period.

The reason for this increase is because many investors are comfortable employing a portfolio manager to manage their money rather than doing it themselves. Many investors have realized that it is not practically feasible to track the investment scenario and make decisions during different market cycles. They are unable to control their emotions when the market corrects or crashes or and they behave differently during different market cycles. They either enter late after the rally is over or sell in panic or end up over-diversifying their portfolio. 

Key rules of PRIM 

• Minimum ticket: Rs 25 lakh, half of conventional PMS.
• Permitted products: Direct mutual fund schemes, ETFs, index funds and SIFs of Indian AMCs.
• Fee: A fixed management fee capped at 1% of client AUM. A performance-based fee model is also allowed.
• Affiliated funds: Investments in schemes of the manager’s affiliated, group or associate AMCs are capped at 25%.
• Manager net worth: Rs 2 crore for PRIM-only applicants. This is a requirement on the manager, not on you as an investor.
• Principal officer: A graduate, CFA or CA with two years of securities market experience and a simplified NISM certification.
• Separation of activities: Mutual fund distribution as well as PRIM activities including handling clients must be done separately, except for accredited investors.
• Exit load: The framework includes a waiver of exit load provisions.

Comparison: PRIM vs Traditional PMS

PRIM vs Managing Direct Plans Yourself

There are many people who think that if you can buy direct mutual fund plans on your own, why pay for a manager? But there is an advantage in having a portfolio manager though you will have to shell out a little more as a percentage of your investments. 

A portfolio manager has more experience and they offer accountability and discretion. A portfolio manager is someone who is accountable for the allocation of your money in building a robust portfolio and rebalancing year after year without having to wait for your approval. For investors who know that they tend to chase returns or make hasty decisions during a market crash, it can be really valuable in protecting your capital. 

The cost, however, is layered. The 1% cap applies to the manager’s fixed fee. The underlying funds still charge their own expense ratios. Let us understand with an example. Suppose a Rs 25 lakh portfolio pays 0.5% fixed fee, which comes to Rs 12500 a year. If the underlying direct plans average a 0.5% expense ratio, that is another Rs 12,500 inside the funds. The investor’s total annual cost would be around Rs 25000, before any performance fee. Running the same funds yourself would cost only Rs 12,500. The 0.5% figure is an assumption for illustration, so check the actual numbers for any fund you are being offered.

The question to ask is not whether PRIM is cheap. It is whether the manager’s allocation and investment decision add more than that extra layer of cost.

Is PRIM suitable for you?

PRIM targets investors who has minimum Rs 25 lakh to invest. These investors understand how mutual funds work and would want a professional for making decisions related to allocation and do not want the risk arising from investing directly in stocks. 

Before you start investing through the PRIM route, ask yourself if you can commit Rs 25 lakh for several years without touching the investment for any kind of emergency withdrawals.

Investors choosing the PRIM route are the kind of investors who prefer their money and investment decisions are handled by professionals. They do not mind paying a little extra fees above fund expenses and can remain invested even during different market cycles. On the other hand, if you enjoy managing your own investments or have a smaller portfolio, disciplined direct-plan SIPs remain a sound choice.

How PRIM will affect distributors, RIAs and portfolio managers

The bigger story may be about competition. PRIM opens up fee-based fund portfolio management, previously available only to registered investment advisers, to a much wider set of players. PMS firms and RIAs will now compete for the same affluent investor.

For mutual fund distributors, the route is open but comes with a caveat. A distributor can move into PRIM, but must keep distribution and PRIM activities and clients separate. Since PRIM invests only in direct plans, there are no trail commissions to earn.

For portfolio managers, entry has become easier. A new class of Independent Fund Managers can run portfolios alongside a registered portfolio manager, who retains full liability. The dealing-room requirement has been relaxed for managers with AUM below Rs 100 crore, which SEBI says covers about 48% of registered managers. The regulations also says managers can invest in IPOs and primary debt issuances and invest up to 10% of client assets in investment-grade unlisted debt with client consent. 

According to the new rules, the portfolio manager can have derivative exposure but it is capped at 1.25 times client AUM. It also allows investments in listed foreign securities, overseas debt funds, government securities, etc. provided the investment follows the FEMA rules and RBI Liberalised Remittance Scheme limits.

Benefits, Risks and Taxation for Investors

Benefits

• Professional allocation and rebalancing without day-to-day effort
• Direct-plan economics at the fund level, with no distributor commission inside
• A single, capped fixed fee that is easy to compare
• A 25% ceiling on affiliated-fund exposure, which limits in-house bias
• Diversification through funds rather than individual stocks

Risks

• Layered costs, with performance fees possible on top
• Market risk remains, since funds can fall in value
• A thin track record for a brand-new category
• Conflicts of interest, which the segregation rules reduce but cannot eliminate
• Tax cost if the manager switches funds frequently

Taxation 

The final tax treatment depends on the rules that get announced and the types of funds involved. Usually, with a PMS structure, you end up bearing the capital gains yourself. This means that if your fund manager moves your money from one fund to another, you may have to deal with either short-term or long-term capital gains. 

Any active rebalancing comes with a tax bill, so make sure to ask your manager about the portfolio churn rate and its related expenses, tax consequences, et cetera beforehand. You may even have to ask a chartered accountant of the tax implications and how to navigate the tax filings before you start investing in such financial products. 

Conclusion

PRIM is a new financial product for affluent investors. The new rules give the much needed accountability and the confidence to investors. This new product is available for investors who want to have a portfolio of Rs 25 lakh and above with a fixed fee 1% (maximum). 

If you plan to invest in PRIM-related schemes, look at the total cost and the manager’s past performance and reputation. Also double check on the tax implications as the return will have an impact on your income tax.

Frequently Asked Questions

1. Is MF-only PMS the same as PRIM?
Yes. PRIM, the Portfolio Managers Route for Investing in Mutual Fund Units, is the official name. MF-only PMS or MF-PMS is the popular name.

2. What is the minimum investment?
the minimum amount to invest through PRIM route is Rs 25 lakh, which is half the Rs 50 lakh required for conventional PMS.

3. Can a PRIM manager buy stocks for me?
No. Under PRIM, portfolios are built from direct plans of mutual funds, ETFs, index funds and SIFs of Indian AMCs.

4. What does PRIM cost?
The fixed management fee is capped at 1% of AUM, and a performance fee model is also allowed. The funds you hold charge their own expense ratios on top.

5. Is PRIM available now?
SEBI’s board has approved it, but the new Portfolio Managers Regulations, 2026 still need to be notified before providers can launch it widely. Existing providers will also need to align their offerings with the final rules.

Disclaimer: This blog is intended for informational and educational purposes only and should not be construed as financial, investment, or legal advice. Investments in mutual funds are subject to market risks. Please consult a qualified financial advisor before making any investment decisions. Aetram Trades Pvt. Ltd. is a SEBI-registered stock broker and an AMFI-registered Mutual Fund Distributor (ARN-281894).