SEBI Introduces PRIM Route for ₹25 Lakh-Plus Mutual Fund Portfolios

Key Takeaways

• SEBI has approved the Portfolio Managers Route for Investing in Mutual Fund units, or PRIM, with a minimum investment requirement of ₹25 lakh. 
• Portfolio managers using the route can allocate client money to direct plans of mutual funds, including Specialised Investment Funds. 
• The framework creates a managed mutual fund portfolio option below the existing minimum investment threshold applicable to conventional PMS offerings. 

The Securities and Exchange Board of India has introduced a new route that will allow portfolio managers to manage mutual fund portfolios for investors with at least ₹25 lakh. 

Called the Portfolio Managers Route for Investing in Mutual Fund units, or PRIM, the framework permits portfolio managers to invest client money in direct plans of mutual fund schemes. Specialised Investment Funds, or SIFs, can also form part of these portfolios. 

The structure is different from a conventional portfolio management service where money is generally invested directly in securities. Under PRIM, the portfolio manager's role centres on selecting mutual fund schemes, deciding allocations and managing the overall portfolio. 

The minimum investment has been fixed at ₹25 lakh. 

That places PRIM between regular mutual fund investing, where entry amounts can be considerably smaller, and the conventional PMS segment, which operates with a higher regulatory minimum. 

Investors will be invested through direct plans of mutual funds. As these plans do not carry distributor commissions, the cost structure at the fund level differs from regular plans. However, investors using PRIM will separately incur the fees charged for portfolio management. 

The introduction of SIFs into the permitted universe also widens the range of products available to a PRIM manager. SIFs were introduced as a separate regulated investment category with greater flexibility than traditional mutual funds and higher minimum investment requirements. 

Moneycontrol reported that PRIM managers will select funds rather than individual stocks, effectively allowing investors to delegate decisions such as scheme selection, asset allocation and portfolio rebalancing. 

For India's mutual fund industry, the new route also creates another channel through which direct-plan assets could be managed professionally. 

Implementation details and operating requirements will determine how widely portfolio managers adopt the structure once the framework becomes operational.