Rewriting India’s investment playbook: Why portfolio management services are taking the lead

A quiet revolution is reshaping India’s financial ecosystem. Over the last decade, a powerful confluence of strong macroeconomic fundamentals, a newly confident domestic investor base, and a technology-first approach to wealth management has set the stage for unprecedented growth. This transformation reflects a deep, structural shift in the country’s wealth creation story.

While this expansion has been broad-based, one segment is moving from the wings to center stage, poised to lead the next leap in wealth creation: Portfolio Management Services (PMS).

What was once a bespoke product reserved for the ultra-elite is now seeing profound democratization. Fueled by rising affluence, a growing demand for personalized investment strategies, and a world-class digital infrastructure, the PMS segment, along with Alternative Investment Funds (AIFs), is on the cusp of an explosive new phase of growth.

Industry estimates paint a stunning picture: the combined Assets Under Management (AUM) of PMS and AIFs, which have already grown at a remarkable Compound Annual Growth Rate (CAGR) of 33% over the last decade, are projected to cross the ₹100 lakh crore mark by 2030. If this momentum is sustained, the industry could multiply more than fivefold in just six years, fundamentally altering India’s investment landscape.

From niche to mainstream: the new face of PMS

The evolution of Portfolio Management Services has been nothing short of remarkable. The PMS of today bears little resemblance to the opaque, high-touch but low-tech offerings of the past. As Anand Shah, CIO – PMS and AIF Investments at ICICI Prudential Asset Management Co., explains, the modern client expects more.

“Today’s PMS clients, typically affluent or HNIs, are no longer satisfied with basic discretionary services,” Shah notes. “They demand greater transparency, real-time visibility, and personalised strategies that are aligned with their financial goals. This shift has prompted PMS providers to upgrade digital capabilities, enhance client experience, and rethink relationship management.”

This evolution is a direct reflection of a broader maturation in India’s wealth management industry. Technology has been the great equalizer, dramatically lowering entry barriers by streamlining onboarding, reporting, and compliance.

“Resident investors can now be onboarded in less than 24 hours,” says Aashish P. Somaiyaa, Chief Executive Officer at WhiteOak Capital Asset Management. “Digital documentation, e-signatures, and better KYC systems have removed much of the friction. While onboarding remains complex for NRIs and institutions, the broader direction is clearly positive.”

The bedrock of belief: India’s macroeconomic resilience

This transformation isn’t happening in a vacuum. It is anchored in the bedrock of India’s macroeconomic resilience and stability. In just a decade, the nation has ascended from the world’s 10th largest economy to fifth, doubling its GDP in the process. Unlike global peers grappling with debt, India has demonstrated consistent fiscal prudence. The country’s fiscal deficit is projected to fall to 4.4% of GDP this fiscal year, down from 5.6% the year prior, all while building a formidable buffer of foreign exchange reserves.

These sound fundamentals have cemented India’s status as a premier long-term investment destination, bolstering the confidence of domestic investors who are now the primary drivers of the market.

“There has been a definitive shift in the maturity of India’s investor base,” Somaiyaa observes. “The surge in SIPs, especially among younger investors, signals a long-term, goal-oriented approach to investing. Domestic participation, both retail and institutional, has become the backbone of market flows, offering a buffer against foreign capital volatility.”

A market powered by domestic ambition

The result of this newfound domestic confidence is a capital market that is vibrant, deep, and increasingly self-reliant. India now accounts for nearly 10% of global IPO volumes—a remarkable feat in a world where listing activity in many developed markets has been sluggish.

“The strength of India’s primary market is a clear reflection of supportive macro trends,” says Rahul Aggarwal, Indian Market and Product Specialist at Bloomberg. “Indian firms, and increasingly even global players, are choosing to raise capital here, showing how vibrant and mature our public markets have become.”

This maturity is also visible in the derivatives market, where participation from retail and proprietary traders has exploded. “Since the pandemic, premium turnover in derivatives has jumped from $10 billion to over $150 billion per month,” Aggarwal adds. “Retail participation has completely transformed the segment, though regulators are rightly tightening norms to ensure sustainability and mitigate risks.”

However, this sustained bull run warrants a degree of caution. Nitin Chanduka, Equity Strategist at Bloomberg Intelligence, notes that while the fundamentals are strong, valuations are a key concern. “The uptrend in Indian equities since the pandemic is the longest in the past two decades, fueled by premium consumption, surging manufacturing, and unprecedented domestic liquidity,” he shares. “But record-high valuations and slowing top-line growth suggest there’s little scope for earnings misses. This is a key risk to watch out for in 2025 as valuations remain expensive, notably in small and mid-cap segments.”

The digital engine: technology as a core differentiator

Underpinning all these trends is a technological revolution that has permeated every corner of financial services. From AI-powered quantitative research to seamless trade execution and integrated client reporting, digital transformation is now the central nervous system of modern investment management.

“Technology is no longer just an enabler; it’s the engine of scale and efficiency,” says Shah of ICICI Prudential AMC. “We’re seeing growing adoption of AI in strategy development, particularly in quantitative investing, though the lack of consistent data remains a challenge. For now, the most effective use of AI is as a complementary layer to traditional research.”

The next chapter in India’s wealth story

India’s capital markets are in a state of historic transition—from being reliant on foreign capital to being domestically anchored, from product-centric to service-oriented, and from manual systems to digital-first operations.

Within this paradigm shift, PMS and AIFs are emerging not merely as alternatives, but as mainstream vehicles for serious, sophisticated wealth creation. The road ahead will demand continuous innovation, robust risk management, and a relentless focus on the investor.

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