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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Mutual Fund Scheme Selection

A client wants to build wealth for a goal 15 years away and can invest a fixed amount each month, but is anxious about timing the market. Which approach would a distributor most appropriately recommend?

A Systematic Investment Plan in a diversified equity fund is most appropriate. The 15-year horizon supports equity exposure, and regular monthly investing averages the purchase cost, which addresses the client's worry about market timing better than concentrated or very short-term debt options.

  1. AA lump sum in a single sectoral fund at a market peak
  2. BA Systematic Investment Plan in a diversified equity fundCorrect
  3. CA fixed deposit in a liquid fund only
  4. DSwitching entirely to a overnight fund each quarter

Explanation

A long horizon suits equity, and SIP averages purchase cost over time, reducing timing risk. A single sectoral bet is concentrated, while liquid or overnight funds will not give long-term growth.

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