India’s ultra-wealthy are staging a quiet rebellion against conventional investing. Increasingly dissatisfied with the one-size-fits-all approach of traditional mutual funds and fixed deposits, high net worth individuals are migrating en masse towards Portfolio Management Services and Alternative Investment Funds that promise tailored strategies, sophisticated diversification, and returns calibrated to individual risk appetites. This isn’t merely a passing fashion amongst the affluent — it represents a fundamental restructuring of how substantial wealth gets managed in the world’s fastest-growing major economy. Combined assets under management in PMS and AIFs have soared to approximately ₹23 lakh crore, reflecting not just growing prosperity but deepening financial sophistication amongst India’s moneyed classes. Industry experts emphasize that PMS and AIFs have transitioned from niche offerings serving a handful of ultra-rich families into mainstream portfolio elements, signaling a clear appetite for customization, diversification, and enhanced risk-adjusted returns that conventional products struggle to deliver.
Explosive Growth That’s Reshaping Wealth Management
The numbers documenting this transformation defy casual explanation. Alternative Investment Fund assets have rocketed from a modest ₹27,484 crore in 2015 to a staggering ₹15.05 lakh crore in 2025, representing a compound annual growth rate exceeding 49 per cent — among the highest in any Indian financial product category. Category II AIFs, encompassing strategies like private equity and private credit that target unlisted opportunities, have ballooned to over ₹11.20 lakh crore. Category III AIFs, representing dynamic market-linked strategies including hedge fund approaches, have reached nearly ₹2.92 lakh crore despite their higher risk profiles and shorter track records.
Portfolio Management Services have demonstrated similarly impressive expansion, growing from ₹1.27 lakh crore in 2015 to ₹8.37 lakh crore in 2025, with a compound annual growth rate exceeding 20 per cent. The number of SEBI-registered portfolio managers has nearly reached 500, reflecting both deeper institutional participation and broader acceptance amongst high net worth investors who previously relied exclusively on mutual funds or direct equity holdings. This proliferation of managers has intensified competition whilst simultaneously expanding strategy diversity available to investors seeking differentiation from standard market-cap weighted indices and conventional asset allocation models.
Affluence Surge Meets Regulatory Sophistication
Multiple converging forces underpin this remarkable growth trajectory. India’s affluent population — individuals possessing net worth exceeding one million US dollars — is projected to reach 19.4 lakh by 2030, creating an expanding pool of investors requiring customized portfolios and sophisticated asset allocation beyond what retail products can provide. This demographic shift reflects broader economic transformation as entrepreneurship, corporate leadership compensation, and intergenerational wealth transfer create unprecedented private capital concentrations.
Regulatory evolution has proved equally critical in catalyzing growth. The Securities and Exchange Board of India has progressively refined frameworks governing PMS and AIFs, introducing co-investment schemes that align manager and investor interests, enhancing transparency requirements that build confidence, and streamlining operational processes that reduce friction. These reforms have transformed previously opaque alternative investments into legitimate, regulated products that wealth advisers can confidently recommend to clients. The regulatory maturation has effectively de-risked the space from a compliance perspective, removing barriers that previously deterred conservative investors despite attractive return prospects.
Technology adoption has also democratized access to sophisticated strategies. Digital platforms now enable smaller portfolio managers to efficiently serve clients without massive infrastructure investments, whilst investors can monitor portfolios, execute transactions, and access research through intuitive interfaces that rival international wealth management platforms. This technological leveling has fragmented what was once a concentrated industry dominated by large institutions, creating opportunities for boutique managers with differentiated approaches.
GIFT City’s Global Gateway Transforming Capital Flows
The International Financial Services Centre at GIFT City has emerged as the pivotal infrastructure enabling India’s wealth management globalization. This special economic zone has become the preferred gateway for cross-border capital, with commitments to AIFs established there surging from US$ 5.5 billion in 2023 to US$ 26.3 billion by 2025 — a fivefold multiplication in merely two years. Category III funds leveraging feeder structures domiciled at GIFT City have received exceptional traction, crossing US$ 10 billion by mid-2025.
This global integration extends beyond simply attracting foreign capital into Indian strategies. GIFT City enables Indian investors to access international opportunities through domestically domiciled structures, effectively allowing wealth to flow bidirectionally whilst maintaining regulatory oversight and tax efficiency. The zone’s regulatory framework mirrors international standards, making it comfortable for global fund managers to establish presence whilst providing Indian investors familiar legal and operational infrastructure.
The convergence of enhanced regulation, expanding manager capabilities, and India’s accelerating integration with global capital markets positions PMS and AIFs to become increasingly influential in wealth management over the coming decade. As one industry leader observes, the rise of alternatives no longer constitutes a temporary theme but rather a permanent feature defining modern Indian wealth management. For the growing millions of affluent Indians, the question is no longer whether to allocate towards alternatives, but rather which strategies and managers best align with their unique objectives — a transformation that fundamentally redefines the wealth management landscape and establishes India as a sophisticated alternatives market rivalling established financial centres globally.