Is your money actually safe?
Yes — and not on trust. SEBI's structure puts your assets in your own name, under independent custody, with the manager kept at arm's length from your money.
The honest answer to “is my money safe?” has two halves. Against someone taking your money, the safeguards are genuinely strong: in a PMS your shares are held in a demat account in your own name, an independent custodian settles every trade, accounts are segregated and audited, and the manager's authority is limited to transacting within an agreed mandate. Against the market falling, nothing here helps — and no honest manager will pretend otherwise.
Your assets never sit on the manager's books.
In a PMS the securities bought for you are held in a demat account opened in your own name — never pooled with other clients and never on the manager's balance sheet. A SEBI-registered custodian, separate from the manager, safekeeps the assets and settles every trade.
Because the people who decide what to buy are kept apart from the people who hold the assets, no single party can both trade and disappear with your holdings.
Six layers between you and a bad actor.
No single rule keeps your capital safe; the protection comes from how the layers stack. The people who decide what to buy are kept separate from the people who hold the assets, and both are kept separate from you owning the account outright.
SEBI registration of the firm and the people
Every portfolio manager operates under the SEBI (Portfolio Managers) Regulations, 2020; every AIF under the SEBI (Alternative Investment Funds) Regulations, 2012. The firm, its principal officer and its compliance officer are on the public register, with minimum net-worth, qualification and experience bars met before a licence is granted.
In a PMS, the assets sit in YOUR demat
This is the safeguard most people miss. Securities bought for you are held in a demat account opened in your own name — never on the manager's balance sheet and never pooled with other clients. The manager has a mandate to transact; it does not own, hold or warehouse your money.
An independent custodian holds and settles
A SEBI-registered custodian, separate from the manager, safekeeps the assets and settles every trade. A separate fund accountant strikes the portfolio value. Because the people who decide what to buy are not the people who hold the assets, no single party can both trade and disappear with the holdings.
Trustee oversight on the AIF side
An AIF is a trust: assets are legally separated from the manager and held by a trustee for the benefit of investors. Since SEBI's November 2023 amendment a registered custodian is mandatory for every AIF, and holdings must be dematerialised. Manager, trustee, custodian, valuer and auditor each hold a piece — no one party controls everything.
Power of attorney is limited — manage, not withdraw
The limited power of attorney you sign lets the manager buy and sell within the agreed mandate. It does not authorise withdrawing cash to a third party or moving assets out of your name. The authority is operational, scoped to the strategy, and revocable.
Mandatory disclosure, reporting and audit
A SEBI disclosure document, a written fee schedule, regular reporting of holdings and portfolio value, and an annual audit of the manager's books and your account are all required. Fees and conflicts of interest must be stated in writing, not buried — and distributors must hold APMI membership and follow its code of conduct.
Draw the line cleanly.
Most disappointment comes from blurring two very different things. Structural safety is about whether your money is held honestly. Market risk is about whether your strategy performs. SEBI addresses the first; the second is always yours to carry.
What the structure protects
- Misappropriation.Assets in your own demat, held by an independent custodian, can't be quietly siphoned off.
- Commingling. PMS accounts are segregated and held individually — your portfolio is never mixed into a common pot.
- Firm failure. If the manager shuts down, your holdings stay with the custodian or trustee, independent of its solvency.
- Hidden fees and conflicts. A written disclosure document and fee schedule are mandatory, not optional.
What it cannot protect
- Market risk. Equity and hybrid strategies can fall in value. Past performance does not predict future returns.
- Manager underperformance. A registered, audited manager can still pick poorly or lag its benchmark for years.
- Liquidity timing.AIFs can hold less liquid assets with defined lock-ins, so access isn't always immediate.
- Guaranteed outcomes.No regulation assures a return — and any “assured” pitch is a rule being broken.
Turn ‘trust me’ into ‘show me’.
The regulations only protect you if the manager is genuinely inside them. Five checks, done before you commit a rupee, separate a registered manager from a convincing pitch.
Pull the SEBI registration number
Ask for the firm's exact SEBI registration number, then verify it yourself on the SEBI register at sebi.gov.in — confirm the legal name, registration category (Portfolio Manager or AIF) and that the status reads active. A genuine manager volunteers this in seconds.
Confirm the demat is in your name and identify the custodian
For a PMS, the demat and trading account must be opened in your own name. Ask which SEBI-registered custodian safekeeps the assets and who strikes the portfolio value. If anyone proposes holding securities in the firm's own account, stop there.
Request the disclosure document, fee schedule and a sample statement
Read the SEBI disclosure document, the all-in fee schedule and a specimen of the periodic reporting you will receive. Vague answers or a refusal to put fees in writing is itself the answer.
For an AIF, map the full governance chain
Confirm the trustee, custodian, valuer and auditor by name, and read the private placement memorandum — especially the lock-in and liquidity terms. A defined accountability hierarchy is the protection; an undefined one is the warning.
Check APMI membership and cross-reference independently
A distributor introducing the product should hold APMI membership and a registration number. Then compare the manager against peers on an independent platform rather than relying on a single sales deck — the same evidence, side by side, is hard to dress up.
Where we sit: PMS Sahi Hai is an APMI-registered distributor (APRN08358), not a SEBI-registered Investment Adviser. We surface cited research and disclose our trail in writing; the final recommendation comes from a licensed adviser.
Regulation guards the custody of your money. It will never guard the outcome.
So the question isn't whether a manager is registered — every legitimate one is. It's whether the strategy is right for you, and whether you can sit through its worst year. That part is on the evidence, not the licence.
Structure guards custody, not the outcome.
The safeguards are genuinely strong against someone taking your money: segregated accounts, independent custody, annual audits and a manager whose authority is limited to transacting within an agreed mandate. Against the market falling, none of it helps.
So the real question isn't whether a manager is registered — every legitimate one is. It's whether the strategy suits you, and whether you can sit through its worst year.
The safety questions people actually ask.
Can my PMS manager simply run away with my money?
The structure is built to stop it. Your securities sit in a demat account in your own name, an independent custodian holds and settles them, a separate accountant values the portfolio, and the books are audited annually. The manager can transact within your mandate but cannot hold your assets in its own name or divert your funds for its own purposes.
What happens if the PMS or AIF firm shuts down?
Your assets do not sit on the firm's balance sheet. In a PMS they remain in your own demat account with the custodian; in an AIF they remain under trustee oversight. Both are independent of the manager's own solvency, so a manager winding down is an administrative event for your holdings, not a loss of them.
Does SEBI guarantee my returns?
No, and anyone who says otherwise is breaking the rules. SEBI regulates conduct, custody, disclosure and governance — it explicitly bars any PMS or AIF from promising or indicating assured returns. Structural safety protects against misappropriation; it does nothing to remove market risk.
Is my money pooled with other investors in a PMS?
No. PMS accounts are segregated and held individually in your name, with no commingling. Your portfolio is accounted for on its own. An AIF is different by design — it is a pooled vehicle — but the pool is ring-fenced under a trustee and a mandatory custodian.
Is my money safer in a PMS or an AIF?
Both are SEBI-regulated with strong safeguards; the mechanics differ. A PMS gives direct ownership in your own demat with no commingling. An AIF pools capital under trustee and custodian oversight, which can suit less liquid strategies. Neither protects you from market movements; both are built to protect against misappropriation.
Are the PMS and AIF rules changing in 2026?
Yes, and the direction reinforces investor protection. A SEBI PMS review expected around its mid-2026 board meeting targets suitability, clearer fee disclosure and curbing mis-selling, while an AIF master circular consolidates and tightens the rulebook toward standardised reporting and stronger governance.
Keep reading.
What is a PMS?
Direct ownership of the shares in your own name — the structure that makes the safeguards work.
Read guideWhat is an AIF?
Pooled, trustee-held, custodian-safekept. How the alternatives wrapper is governed.
Read guideRisk & returns
What regulation deliberately does not remove — and how to read drawdown honestly.
Read guideSee every manager's registration, fees and record in one place.
Educational content only, not investment advice. Verify any manager's registration, custodian and fee specifics against SEBI records and the disclosure document, and confirm suitability with a qualified adviser. Investments are subject to market risks.