Comparison
AIF vs PMS
AIF (Alternative Investment Fund) and PMS (Portfolio Management Service) are India's two main pooled / managed investment structures. Here is the comparison that matters for fund managers and investors.
Side-by-side
Quick comparison.
Comparison of AIF vs PMS for fund managers and HNI / institutional investors.
| Criterion | AIF | PMS |
|---|---|---|
| Structure | Pooled fund (trust / LLP / company) | Discretionary portfolio managed individually per investor |
| Regulator | SEBI (AIF Regulations 2012) | SEBI (PMS Regulations 2020) |
| Minimum investor capital | ₹1 crore | ₹50 lakh |
| Investor count | Capped (varies by AIF category) | Per-investor, no cap |
| Manager incentive | Carry — typically 20% above hurdle | Performance fee — typically 20% above hurdle |
| Asset classes | Cat I (VC, SME, infra) / Cat II (PE, debt) / Cat III (hedge, listed) | Listed equity (primarily), some debt and derivatives |
| Lock-in | Cat I/II: closed-ended (5–10 years). Cat III: open-ended. | Typically open-ended with notice period |
| Tax treatment | Pass-through (Cat I/II) or fund-level (Cat III) | Pass-through to investors |
| Best for | Illiquid investments, longer horizon, larger pools | Liquid listed equity, individual portfolio customisation |
| Setup cost & timeline | ₹40–80 lakh, 6–9 months | ₹30–60 lakh, 4–6 months |
| GIFT City option | Yes — IFSC AIF with tax benefits for global LPs | Limited — typically domestic |
FAQ
Common questions.
Answers to questions Indian founders ask most often about this choice.
- Should a fund manager set up an AIF or PMS? — Depends on strategy. Illiquid private equity / VC / debt → AIF. Liquid listed equity strategy serving HNIs → PMS. Hybrid…
- What's the minimum investor capital? — AIF: ₹1 crore. PMS: ₹50 lakh. These are SEBI minimums and not negotiable.
- What's better for tax? — AIF Cat I/II: pass-through to investors (tax at investor level). AIF Cat III: fund-level taxation. PMS: pass-through to …
- Can foreign investors invest? — AIF: yes (with FEMA reporting; GIFT City AIFs are particularly tax-efficient for global LPs). PMS: yes via FPI route, bu…
- How long does setup take? — AIF: 6–9 months (SEBI registration, fund docs, manager licence). PMS: 4–6 months (SEBI PMS licence, scheme launch). We r…