This is not a product that only a few investors may buy anymore. It is a major and vital portion of India’s capital markets. As the sector grows, one huge fear shines out: the risk of concentration.
The Securities and Exchange Board of India (SEBI) will change its rules a lot in 2026. This shift will be about governance, making sure things are right, being open, and safeguarding investors. So, this talk isn’t just a coincidence.
Concentration Is not the Bad Guy
Let’s get started with clear ideas. Concentration isn’t necessarily a bad thing.
Live Events
Many good ways to invest require you to stay focused. Holding 15 to 25 high-conviction companies can give you substantial returns if your research is solid and the cycles are right. A number of PMS companies in India openly run concentrated portfolios and use this approach to promote themselves.
Concentration isn’t a novel idea, even for mutual funds. According to AMFI data from December 2025, targeted mutual funds were in charge of roughly ₹1.75 lakh crore
PMS investments are not put together like mutual funds. Under a contract, they each manage each client separately. That structure lets you be flexible, but also makes it tougher to compare.
Two clients who utilise the same PMS technique might not have the same portfolios because of when they joined, how much money they had, or how they do things. The returns can be different. The weights of portfolios can alter.
This makes it tougher to tell how risky something is.
A PMS portfolio with 20 stocks could look like it includes a lot of various kinds of companies on paper. If all 20 of those stocks are connected to the same economic issue, like growth in domestic credit, capital spending, or industrial exports, then the portfolio is essentially simply one huge gamble on the economy.
The Liquidity Layer: Access to Both Public and Private Stocks
PMS that don’t have to make choices can put up to 25% of their money into unlisted securities, according to SEBI rules. For authorised investors with contracts worth at least ₹10 crore, the risk of investing in unlisted companies could be significantly higher, depending on the parameters of the deal. This difference is essential.
Putting a lot of money into a few stocks makes them less stable. Prices can go down a lot, but there is typically enough money to buy and sell.
Putting too much money into assets that aren’t disclosed makes liquidity risk go up. There may be fewer methods to get out when the economy is terrible. It could also be harder to tell how much something is worth.
As PMS gets bigger, this layer of liquidity becomes more significant, especially for strategies that focus on private or pre-IPO investments.
The Growth of Curated Portfolios
Things are changing, not just PMS. More and more investors in the wealth market are moving toward curated or model-based portfolios.
The Model Portfolios Facility for the Jio BlackRock Mutual Fund opened in January 2026. The premise is simple: instead of picking and choosing which funds to invest in and how much to put into each one, investors can choose a ready-made blend of funds. Online, you may make, keep track of, and rebalance your portfolio. The framework does all the heavy work, like making judgements on how to allocate resources, making changes on a regular basis, and keeping an eye on things.
A lot of investors are happy about this. It could be hard to pick a fund. You need to be disciplined when it comes to asset allocation. People often wait too long to rebalance. A customised portfolio solves that problem. You choose a strategy or level of risk, and the structure is already in place.
At first glance, it also looks like it has a lot going on. There are a lot of money. There are many methods to split things up. It looks like it’s all over the place. But when you look more closely, those funds could have large-cap banks, capital goods companies, or consumer leaders that are all the same. The investor sees five things, but the economic exposure may still be heavily weighted toward one sector or growth narrative.
This is concentration in layers. It’s not as easy to find as a conventional 15-stock portfolio. But the risk can be just as bad.
Why SEBI’s 2026 Review Is Right on Time
Earlier this year, SEBI indicated during the PMS Conclave that it would perform a complete review of the PMS rules, focusing on:
- Governance
- Transparency
- Suitability
- Technology and processes
- Investor protection
This plan makes sense because the sector is worth ₹41 lakh crore. The most essential factor is how well it fits. Concentrated portfolios are best for investors who are willing to take on a lot of risk and have a long time to wait. People who demand steadiness, like a benchmark, shouldn’t use them.
Being honest is equally important. Investors need clear information about:
- Top holdings and weight concentration
- Sector exposure
- Liquidity profile
- Unlisted allocation
- Portfolio construction and rebalancing methodology
Being honest about how curated services work is just as important as being honest about how investments function as they become more common.
Risk of Capacity: The Stress You Don’t See
People often forget about capacity as well. When a focused strategy accumulates a lot of AUM, it becomes harder to buy and sell small- and mid-cap stocks without affecting prices. Costs of impact rise. Not as much versatility.
When you have enough money, you can focus better. As things get bigger, it gets harder to preserve that balance.
The Most Important Question for Investors
India does not have a problem with concentration. It can’t focus. People will keep investing for a reason. There will still be techniques that people really believe in. Curated portfolios will get bigger.
Before putting money into something, investors should ask themselves one simple question:
How many different economic risks am I really taking?
- Not how many shares.
- Not how many funds there are.
- Not how many plans there are.
How many real, unconnected things affect return?
If most of the portfolio is dependent on one huge topic, one macro cycle, or one sector, the risk is all in one place, even if it looks like it has a lot of distinct aspects.
Conclusion
The 2026 changes to SEBI probably won’t stop concentrated strategies. Instead, it will presumably want more information, more checks on eligibility, and better governance.
And that’s good for you. PMS has too many assets (₹41.59 lakh crore) to deal with risk that isn’t clear. Transparency needs to keep up with the rise of customised portfolio models.
Being focused can help you get rich. It can also make drawdowns worse.
The difference is not in how focused the portfolio is; it’s if the investor actually knows what risks they are taking.