Article 12 — Portfolio Management Services and AIF Category III: The India Comparison
Article 12 — Portfolio Management Services and AIF Category III: The India Comparison
title: "PMS vs AIF Category III in India — Which Structure for a First-Time Fund Manager"
description: "The four-way comparison between PMS, AIF Cat III, sub-advisory, and family office for Indian retail-to-professional fund managers."
keyword: "portfolio management services india pms aif"
stage: 6
The Indian retail-to-professional transition has four legal structures. Picking the right one is a 10-year decision.
PMS — Portfolio Management Services
- Minimum client size: ₹50 lakh
- Structure: Separately Managed Accounts (SMAs) — each client has their own demat
- Setup cost: ₹15-35 lakh
- Ongoing: ₹20-50 lakh/year
- Tax: pass-through (client pays tax on their share of gains)
- Regulatory: SEBI PMS registration, 3-6 months to obtain
- Best for: HNI clients who want liquid positions they can see and control
AIF Category III
- Minimum fund corpus: ₹20 crore
- Minimum per-LP: ₹1 crore
- Setup cost: ₹25-60 lakh
- Ongoing: ₹40-100 lakh/year
- Tax: fund-level (non-pass-through)
- Regulatory: SEBI AIF registration
- Best for: institutional and family-office LPs; complex strategies (long-short, leveraged, derivatives)
Sub-advisory
- Structure: operate under an existing AMC/PMS house's regulatory wrapper
- Setup cost: ₹5-10 lakh
- Ongoing: ₹10-20 lakh/year
- Economics: sponsor takes 40-70% of fees
- Best for: first-time managers who want speed-to-market and minimum capital risk
Single-Family Office
- Structure: unregulated (if strictly single family)
- Setup cost: minimal
- Best for: managing your own extended family's capital pre-transition
The decision matrix
| You have... | Best first vehicle |
|---|---|
| ≥ ₹50 lakh of HNI clients | PMS |
| ≥ ₹20 crore committed from institutional LPs | AIF Cat III |
| Strategy but no network | Sub-advisory |
| Family capital only | Single-family office |
Stage 6 Volume 5 connection
Stage 6 Volume 5 (Capital Raising) covers all four vehicles in operational depth, plus the 18-page investor deck structure, the DDQ workflow, and the 9-18 month LP courtship timeline.
Related reading
- AIF Category III Operations in India: A Practical Guide for First-Time Fund Managers
- Mutual Fund Overlap Analysis for Indian Active Investors: The Hidden Cost of Diversification That Isn't
- Indian REITs Explained: Structure, Yield Distribution, and Where They Fit in a Trader's Portfolio
Ready to go deeper than this article?
Bharath Shiksha is a 30-volume curriculum across 6 stages — from chart reading (Stage 1 at ₹2,999) through capital raising (Stage 6 at ₹18,999), or the full bundle at ₹39,999. Every volume has a 14-page companion worksheet, a 10-question gate quiz, and a 7-day money-back guarantee.
See the full curriculum →