MUMBAI, April 14 -- Portfolio management services (PMS) firms have asked the market regulator to widen their investment universe, as the segment struggles to keep pace with rival products, four people aware of the discussions said. Key demands include allowing investments in unlisted markets and permission to participate as anchor investors in initial public offerings (IPO), both currently restricted for PMS structures. Currently, only non-discretionary PMS allows up to 25% allocation to unlisted securities, such as alternative investment fund units, real estate investment trusts and infrastructure investment trusts. Discretionary PMS, which accounts for 92% of total PMS assets as of February, is not allowed to invest in unlisted securities. The push comes as PMS growth trails mutual funds and alternative investment funds (AIFs), with industry executives pointing to tighter investment rules, operational constraints and tax friction as factors hurting competitiveness in India's asset management market. "SEBI (Securities and Exchange Board of India) is keen on growing this segment and making PMS a platform for wealth management. To do so, they are looking at increasing accessibility and to broaden the number of securities PMS firms can invest in," said one of the executives mentioned above. The proposals coincide with a broader review of PMS regulations by the market regulator. Mint reported in February that Sebi is planning to issue a consultation paper to revise the six-year-old framework before its June board meeting, marking the first comprehensive overhaul of the rules. The regulator has sought feedback from industry participants in recent months, which is expected to be considered during the revamp, as current investment restrictions put PMS firms at a "handicap," another executive mentioned above. Emailed queries to SEBI and Association of Portfolio Managers in India (APMI) sent earlier today did not elicit a response till press time. PMS assets under management (AUM) have lagged other asset classes. Assets grew 14.4% year-on-year to Rs.11.7 lakh crore as of January, according to APMI. The AUM excludes assets from the Employees' Provident Fund Organization. In contrast, mutual fund AUM rose 21% to Rs.81.01 lakh crore over the same period, according to the Association of Mutual Funds in India (AMFI). Client growth shows a similar divergence. PMS accounts rose only about 7% between June 2025 and February 2026 to an estimated 217,000, while mutual fund folios grew 12% to 271 million. India currently has 493 PMS firms, according to Apmi. In practice, PMS flexibility remains constrained investments in unlisted securities are not allowed. In contrast, AIFs have significantly greater scope to invest in such assets. "One way anchor allocations for PMS could be allowed is by classifying PMS as Qualified Institutional Buyers. Now, NSDL (National Securities Depository Ltd) and CDSL (Central Depository Services (India) Ltd) allow differentiation between PMS demat accounts and individual accounts. So, there could be a case for considering these PMS demat accounts as QIBs (qualified institutional buyers)," said another PMS executive on the condition of anonymity....