The Indian alternative investment milieu is basically in a dramatic change phase, as the total assets of Portfolio Management Services (PMS) and Alternative Investment Funds (AIFs) together have gone beyond ₹23 lakh crore in September 2025. The transformation of the last ten years could be described as the triple play of rapid asset growth, increased participation of sophisticated investors, and a distinct movement towards high-conviction, alpha-focused strategies. Apart from this, the present stage is also indicative of the overall industry’s move towards greater transparency, wider access, and deeper understanding.

During the last decade, the alternatives segment has been able to increase its size at a very high CAGR of 31.24%, thus managing the growth from ₹1.54 lakh crore to ₹23.43 lakh crore. This change is happening in a world full of various sorts of uncertainties, where investors look for other options besides the conventional equity and debt, which can provide diversification and long-term resilience.

PMS Segment Sees Sevenfold Expansion

The Portfolio Management Services segment has experienced extensive growth, increasing almost seven times over the last ten years. PMS Assets Under Management (including both discretionary and non-discretionary mandates) have gone up from ₹1.27 lakh crore in September 2015 to ₹8.37 lakh crore in September 2025; thus, the 10-year CAGR is 20.75%.

The increase in the consumption pattern of India’s middle class and the evolution of the investment culture in India in turn have led to the investment practices getting more professional and the affluent investors getting more willing to adopt structured, research-led portfolios tailored to navigate complex market conditions.

AIF Commitments Accelerate with 49% CAGR

The Alternative Investment Funds segment has gone even faster than PMS in terms of energy, with the number of commitments jumping from ₹27,484 crore in September 2015 to ₹15.05 lakh crore in September 2025. This is equivalent to an incredible CAGR of 49.23% for the ten years.

Category II AIFs, concentrated on private equity, private credit, real estate, and other non-public market investment strategies, have been the main vehicle for the expansion of the firm. Their commitments have increased from ₹14,707 crore to ₹11,20,589 crore over the same time frame; thus, they achieved a remarkable CAGR of 54.24%. This is proof of increasing adoption of the high-conviction, long-horizon, and strategy-driven models, which cannot always be supplied by traditional asset classes.

India is now home to a massively increased and diversified AIF universe that mirrors investor demand across the complete spectrum of themes, from venture funding and alternative credit to hybrid and structured.

A New Mindset Driving the Shift

The rise of alternatives in India is largely a result of a major change in investor behavior. Wealthy investors are increasingly moving to more complex, research-driven, and long-term focused strategies that emphasize risk-adjusted returns. Such instruments offer the opportunity to access professional frameworks and unique strategies tailored for a volatile market environment.

Moreover, the population of new-age entrepreneurs, senior professionals, and investors from tier-2 cities has substantially grown, which can be attributed to improved market education and advisory services. As local markets become more interconnected with global capital flows, the demand for professionally managed alternative channels keeps on increasing.

The Road Ahead

India’s move in the alternatives market is largely a result of the changes hinted at above: a growing affluent base, a clearer regulatory framework, more deep institutional involvement, and a maturing investment ecosystem. AIF, PMS & Gift City, which were considered niche products, have now become a key feature of portfolio construction.

The path is very clear: the Indian alternative investment revolution is just a beginning. With such strong structural tailwinds and changing investor preferences, the next ten years will probably see more and more integration of alternatives as a part of mainstream wealth management.