AIF vs PMS vs Mutual Funds: Where Should You Park Your Wealth in 2025? 
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AIF vs PMS vs Mutual Funds: Where Should You 
Park Your Wealth in 2025?
In the dynamic world of investing, the choice of a suitable investment vehicle can 
make or break your long-term wealth strategy. In 2025, Indian investors — 
especially HNIs (High Net- Worth Individuals) and affluent millennials — are 
increasingly choosing between three main options: Alternative Investment Funds 
(AIFs), Portfolio Management Services (PMS), and Mutual Funds.
But which one is right for you? Let’s break it down in simple terms — with 
real insights, updated numbers, and a 360-degree comparison.
What Are They? – The 
Basics Mutual Funds
Mutual funds pool money from various investors and invest in equity, debt, or 
hybrid instruments. Managed by professional fund managers under SEBI 
regulations, they are ideal for retail investors.
Portfolio Management Services (PMS)
PMS is a tailored investment strategy where a portfolio manager creates and 
manages a portfolio specifically for you, typically in equities. It’s meant for 
investors looking to invest 50 
lakh or more.
Alternative Investment Funds (AIFs)
AIFs invest in non-traditional asset classes such as private equity, real estate, hedge 
funds, or venture capital. Minimum investment:  1 crore. It’s a sophisticated vehicle, 
often accessed by HNIs and ultra-HNIs.
For more detailed information about AIF, Click on the following link: What is AIF?
Performance: Who’s Beating the Market in 2025?
1. Mutual Funds (Equity category) delivered an average return of 11-13% CAGR 
over the past 5 years.
2.PMS strategies, particularly in small-cap and thematic segments, have 
outperformed mutual funds, clocking 14-18% CAGR for top-performing managers.
3.AIFs, especially Category II (Private Equity and Venture Capital), are showing 
IRRs of 20% or more, although they come with higher risk and longer lock-in 
periods.
Pros and Cons
1.Mutual 
Funds Pros:
Low cost.
Regulated and 
transparent. Easy to 
start and exit.
Cons:
No customisation.
Lower returns for 
aggressive investors.
2. PMS
Pros:
Tailored strategies.
Greater flexibility.
Cons:
High ticket size.
Performance varies across managers.
3. AIF
Pros:
Access to exclusive assets (VCs, PE, Real 
Estate). Higher alpha potential.
Cons:
High risk. 
Complex 
structure. Long 
lock-ins.
Who Should Choose 
What in 2025?
1. Salaried or First-time Investors- Stock with mutual funds. SIPs offer 
disciplined investing. Begin with hybrid or large-cap funds and gradually 
diversify.
2. Professionals & Business Owners with 50L+- If you’re looking for 
capital appreciation with a personal touch, PMS could be your route. Opt for 
strategies that align with your risk appetite (e.g., focused, smallcap, value 
investing).
3. HNIs, CXOs, and Ultra-Rich Investors-For those with access to ₹1 crore+ and a 
long- term view (5-7 years), AIFs offer differentiated exposure — from pre-IPO 
equity to real estate yield funds and credit strategies.
What Does SEBI Say?
SEBI is increasingly tightening norms around PMS and AIFs to improve 
transparency, reduce mis-selling, and ensure investor protection. In 2025, SEBI is 
pushing for:
More frequent portfolio disclosures for AIFs
Capping performance fees based on hurdle rates in PMS
Discouraging retail investors from AIFs unless via advisers
This ensures that only informed and eligible investors participate in complex 
products like PMS and AIFs.
Conclusion: Choose Based on Risk, Returns & Goals
In 2025, Indian investors are spoilt for choice — but clarity is key.
For liquidity and low risk: Mutual 
Funds For customised strategy and 
alpha: PMS For high-growth, illiquid 
assets: AIFs
Match the product with your financial goals, investment horizon, and risk capacity. 
And always, invest with a regulated and experienced partner.
At Rits Capital, we help you build a diversified portfolio across listed and unlisted 
assets, AIFs, PMS, and beyond — with full transparency and strategic guidance.