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NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Role of Portfolio Managers

A discretionary portfolio manager is distinguished from a non-discretionary portfolio manager mainly because the discretionary manager:

A discretionary portfolio manager takes investment and trading decisions for the client independently, under the terms of the PMS agreement, without needing prior approval for each transaction. Non-discretionary managers must obtain client consent for every decision. Both must maintain separate client accounts.

  1. ACan take investment decisions on behalf of the client without seeking prior consent for each transactionCorrect
  2. BCan only execute trades after receiving written client approval for each trade
  3. CCannot invest in listed equity shares
  4. DIs exempt from maintaining separate client accounts

Explanation

In discretionary PMS the manager exercises independent discretion over investment choices under the agreement, in the client's name and account. In non-discretionary PMS each decision needs client consent, so the second option describes that type. Separate client accounts are mandatory for all types.

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