What Is PRIM? Sebi’s New Route For Portfolio Managers Explained

The Securities and Exchange Board of India (Sebi) has introduced a new avenue for portfolio managers to invest clients’ money in direct mutual fund plans, including exchange-traded funds (ETFs), index funds and specialised investment funds (SIFs). Called the Portfolio Managers Route for Investing in Mutual Fund units, or PRIM, the framework was approved by the Sebi Board on September 24, 2026, as part of the new Sebi (Portfolio Managers) Regulations, 2026. The regulations replace the 2020 framework and seek to simplify compliance and develop the portfolio management services (PMS) industry.

Under PRIM, the minimum investment will be Rs 25 lakh. A portfolio manager applying only for PRIM will need a net worth of Rs 2 crore. Management fees will be capped at 1 per cent of client assets under management (AUM), while performance-linked fees will also be permitted.

Investments in mutual fund schemes managed by affiliated, group or associate asset management companies (AMCs) will be capped at 25 per cent.

What PRIM Means For Investors

PRIM essentially creates a professionally-managed mutual fund portfolio for investors who want someone else to handle fund selection, allocation and rebalancing.

Shobhit Mathur, co-founder at Ionic Wealth, described it as “a packaged wealth management service giving a complete portfolio in one single platform with no hassles of execution for the client.” “This is substantially convenient vs an investor holding multiple MF schemes,” he said.

He added that PRIM addresses two issues faced by investors: fragmented holdings and delays in execution. “The portfolio is a set of instruments that fits together and is not a collection of instruments; second, execution can be delayed because of availability, bandwidth and biases which now a manager takes care of ensuring on time execution,” Mathur said.

Under the framework, a Sebi-registered portfolio manager can select and rebalance direct-plan mutual funds for clients starting at Rs 25 lakh and report on the portfolio as a whole.

“It is a service, not a better fund. You pay up to 1 per cent a year, or a possible performance fee and the underlying funds’ expense ratios,” Mathur said.

He added that PRIM could bridge the gap between self-directed mutual fund investing and conventional PMS. “It suits investors who want someone accountable for allocation; a disciplined investor holding a few index funds will usually pay less,” he added.

Existing MF Investors Could Be The Early Users

The initial demand for PRIM could come from mutual fund investors who already have substantial but scattered holdings and want professional portfolio management.

Aditya Agarwal, co-founder of Wealthy.in, said PRIM could add a new portfolio-management layer to the mutual fund industry. “PRIM could create a new distribution and portfolio-management layer within the mutual fund ecosystem. Its significance lies less in providing access to mutual funds which investors already have and more in allowing professional managers to take responsibility for fund selection, asset allocation and rebalancing,” Agarwal said.

The Rs 25 lakh threshold puts PRIM between conventional mutual fund investing and the Rs 50 lakh minimum applicable to traditional PMS, he said. Agarwal said the initial flows are likely to come from both existing mutual fund investors and new money. “Since PRIM does not create a new asset class, some early flows could come from investors who already hold mutual funds but want professional portfolio construction, consolidation and rebalancing,” he said.

At the same time, the lower entry point could bring investors into professionally-managed mutual fund portfolios who currently invest outside this segment. Mathur also expects early adoption to come from existing mutual fund investors with scattered holdings. “Fresh money follows as track records build,” he said.

Equity, Passive Funds And SIFs Could Find A Role

PRIM does not restrict portfolio managers to a particular mutual fund category. Agarwal expects equity, hybrid, passive and specialised strategies to feature in portfolios depending on the investor’s requirements. “Portfolio managers are likely to use different products as building blocks depending on the client’s risk profile, investment horizon, asset allocation requirements and market conditions,” he added.

Equity funds could provide growth exposure, while hybrid and fixed-income strategies could be used for diversification and risk management. ETFs and index funds could also appeal to managers looking for low-cost market exposure. For active funds, Agarwal said selection would depend on “consistency of performance, downside management, portfolio construction, liquidity, costs and the manager's investment philosophy”.

The inclusion of SIFs could give the relatively new category another channel to reach affluent investors through professionally managed portfolios. “SIF assets crossed Rs 31,000 crore in August 2026, with strong recent inflows, indicating growing acceptance of the category,” Agarwal added.

He further said that portfolio managers could use SIFs alongside conventional mutual funds, ETFs and index funds. However, allocations would depend on the strategy’s suitability, performance consistency, liquidity, risk and its role in the overall portfolio.

There is also a practical constraint. Mathur pointed out that SIFs require a minimum investment of Rs 10 lakh per investor per AMC. “So a Rs 25 lakh PRIM portfolio can use SIFs from only one or two fund houses,” he said.

The Rs 25 lakh threshold could, therefore, create a separate segment of affluent investors seeking professional portfolio construction without committing Rs 50 lakh to a conventional PMS. “The existing Rs 50 lakh PMS threshold can exclude investors who have meaningful investible assets but do not want to commit that amount to a conventional PMS,” Agarwal said.

The eventual size of this segment will depend on pricing, performance, investor awareness and whether investors see enough value in paying for professional fund selection and asset allocation, he added.