While the mutual fund industry has been the more prominent beneficiary of this trend, portfolio management services have also seen a doubling of their assets to more than Rs 15,000 crore (Rs 150 billion) this year, according to industry sources.
"There is a section of the very well off who have very little or no exposure to equities and are increasingly feeling left out after hearing their friends talk of the fortunes they made," says Ashish Ranawade who heads UTI's Axel, the newly started personalised wealth management services arm which is the biggest in the country, in terms of reach.
These are the people who have swelled the ranks of PMS over the last one year. Axel is reported to have grossed a few hundred crore rupees by focussing on the "medium" rich, especially those in the smaller towns.
Though publicly declared figures are not available for such services, the biggest player Kotak Mahindra AMC claims doubling of its assets under discretionary management to Rs 3,300 crore (Rs 33 billion) this year.
So does the second biggest in the discretionary segment, Prudential ICICI. It claims 100 per cent growth over the past year to more than Rs 2,000 crore (Rs 20 billion) now. It also has around Rs 4,500 crore (Rs 45 billion) under non-binding "advisory" management.
Besides the traditional asset management companies, brokers like ASK Raymond James and Motilal Oswal have also jumped into the PMS fray, cornering increasingly significant market-shares over the past one year.
"We are likely to see a lot of high net worth investors switch to PMS if the markets continue to be as volatile as now. You are much more prone to long-term market ups and downs if you are invested in a mutual fund compared to a PMS fund as, depending on the client's risk appetite, it is possible for us to convert his holding to cash in troubled times, which is unimaginable for a mutual fund," Ranawade points out.
Shahzad Madon, head of the PMS services at Pru ICICI, concurs, "It is not possible for a mutual fund to convert to cash without eroding the value of its own investments, whereas due to the small sizes of such accounts, we can still do it if the client wants us to. In fact, we have recently launched aggressive funds, which are designed to make money even in a diving market using derivatives and other strategies. Such schemes are being received very well," he says.
"For many of our prospective customers, it is like their baby has become too big for them to handle any more, thanks to the prolonged bull-run," says Ashish Bhargav of Kotak Mahindra AMC.
"Now, many of them just want to hand it over to someone who will take care of the returns. Higher prices have also increased the number of people with Rs 25-30 lakh worth of equities required to avail of PMS. Anyway, the costs are pretty similar, at around 2.5 per cent per year, so people who want a little more control on their assets than a mutual fund allows are turning to us," he points out.
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