SEBI has introduced the Portfolio Managers Route for Investing in Mutual Fund units (PRIM), allowing investors with at least ₹25 lakh to hire professionals for MF portfolio management. While it aims to provide disciplined asset allocation with a 1% fee cap, investors must assess total costs, including underlying fund expense ratios and potential concentration risks, before signing up.
The Securities and Exchange Board of India (SEBI) has officially approved the Portfolio Managers Route for Investing in Mutual Fund units, known as PRIM. This framework, cleared on September 24, 2026, creates a new category of service for investors looking for professional help to manage their mutual fund portfolios. It is designed to sit between the do-it-yourself (DIY) approach and full-scale Portfolio Management Services (PMS), which typically carry much higher investment thresholds.
Under the new rules, investors with a minimum corpus of ₹25 lakh can appoint a portfolio manager to handle their investments. These managers are authorized to construct portfolios using direct-plan mutual funds, exchange-traded funds (ETFs), index funds, and Specialised Investment Funds (SIFs). The primary goal is to provide disciplined oversight and strategic asset allocation for retail investors who may lack the time to manage their own collections of funds.
Understanding the Cost Structure
The regulation sets a fixed management fee cap at 1% of the assets under management (AUM) per annum. However, investors need to look beyond this 1% fee to understand the total cost of ownership. Since the portfolio manager will be investing in mutual fund schemes, the investor will also bear the expense ratios of the underlying funds. This is known as cost stacking. While the 1% fee covers the professional advice and management, the combined cost of the advisory fee and the expense ratios could make this service more expensive than a simple, self-managed portfolio of low-cost index funds.
Managing Concentration and Operational Risks
A key challenge for investors, particularly those at the ₹25 lakh minimum threshold, is potential concentration risk. Specialised Investment Funds (SIFs) often require a minimum investment of ₹10 lakh per scheme. If an investor enters the PRIM framework with only the minimum ₹25 lakh, the portfolio manager might struggle to diversify across many different fund houses without hitting minimum investment limits. This could result in a portfolio that is concentrated in just one or two asset management companies, rather than a well-diversified basket.
To address conflicts of interest, SEBI has implemented a 25% prudential cap on investments in schemes of affiliated, group, or associate asset management companies. This ensures that managers cannot prioritize the products of their own fund houses over the client's interests. Additionally, the new rules mandate that managers must clearly segregate their PRIM activities from their standard mutual fund distribution business to prevent any overlap in operations.
As the industry prepares for this rollout, investors should track the upcoming detailed operational guidelines and final circulars. These documents are expected to provide clarity on critical areas such as tax treatment, benchmarking, and reporting requirements. Until these details are finalized, potential users should carefully evaluate whether the professional oversight offered by PRIM justifies the total expense relative to their existing investment strategy.