To compare the performance of their portfolios, PMS managers use public benchmarks of exchanges such as National Stock Exchange (NSE)’s Nifty 50 or Bombay Stock Exchange (BSE)’s 30-share Sensex. Such comparisons typically run on their websites, factsheets, investor presentations, or such collateral material.
“Some PMSs within the industry have argued that there is no need to pay just to use the value of the benchmark index as it is public information,” said one of the people.
The discussions on benchmarking, along with other issues, happened on November 12 when the Association of Portfolio Managers of India (APMI) met Sebi chairperson Tuhin Kanta Pandey.
The charges, set at around ₹1 lakh a year, may be small for large PMS firms but pinch the smaller ones, especially at a time of a heightened regulation and compliances sought by Sebi.
For every new benchmark used – say, for an equity or hybrid strategy – an additional fee has to be paid. In PMS parlance, a strategy is equivalent to a scheme in a mutual fund.
Sagar Lele, executive director at Paterson PMS said costs add up because a PMS may have different strategies which need different benchmarks. “We have a large-cap scheme, a mid-cap scheme, a small-cap scheme—each has to use the appropriate benchmark,” he said.
As of March 2025, there are a total 472 registered PMSs in the country and assuming each pays for just one scheme, the total benchmarking fees adds up to around ₹4.72 crore. The payout is likely more given the number of “strategies” different PMS players have.
To be sure, mutual funds also pay a fee to use a benchmark but experts argue that mutual funds are substantially larger in size as compared to a PMSs. The smallest mutual fund has an AUM of ₹173 crore while the smallest PMS has an AUM of ₹1 crore, as of October end, per data from APMI and Value Research, a mutual fund database.
Compliance cost up
Mint reported in August that the PMS industry, once known for its light-touch regulation, is now facing significantly higher compliance demands. Over the past year and a half, PMS providers have been required to submit as many as 12 reports a month to Sebi, covering quantitative information like client information, transaction details, expense and employee roles, besides routine monthly reports to the regulator and APMI.
According to fund managers, it takes assets of around ₹150 crore for a PMS to break-even, these fund managers said. For instance, a portfolio manager earns around 2% fee annually on the ₹150 crore assets under management (AUM) — that is, ₹3 crore. This is used to pay custodian and fund accounting costs, technology plus software costs, and salaries, besides compliance costs.
For small PMS players managing ₹50-100 crore, even a couple of lakh rupees can feel heavy because of the lower income they earn, said Rajkumar Singhal, CEO at Quest Investment Managers.
If APMI could collect a lower fee from all the PMSs to get access to the benchmarks, that would be reasonable, suggested Vijay Bharadia, founder and chief investment officer at Wallfort PMS. “Democratizing the cost of access to benchmark data through the APMI platform will not only support new or smaller players but also help existing PMS providers deliver services more cost-effectively,” he said.
As of September 30, the AUM of the PMS industry (non-EPFO) stood at ₹8.37 trillion, growing 12% year-on-year, Sebi data showed.
An executive from one of the stock exchanges, however, believes Sebi is unlikely to take up issues related to how products are priced by the exchanges. The executive declined to be named.
Emails sent to Sebi, NSE, and BSE remained unanswered at the time of publishing this story.
