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

A distributor is advising a 28-year-old investor who wants to build a retirement corpus over 30 years and can tolerate high volatility. Which category of scheme is most suitable as the core holding?

A diversified equity fund is most suitable because the investor has a 30-year horizon and high risk tolerance. Equity offers the best long-term growth potential, whereas overnight, liquid and ultra-short funds are low-return debt products meant for short-term parking of money.

  1. AOvernight fund
  2. BLiquid fund
  3. CDiversified equity fundCorrect
  4. DUltra-short duration fund

Explanation

A long horizon and high risk tolerance match growth-oriented equity exposure, which has historically given the highest inflation-beating returns over long periods. Overnight, liquid and ultra-short funds are debt products meant for parking surplus money, and would not build a large retirement corpus.

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