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

A mutual fund distributor is advising a 28-year-old investor with a 20-year goal of building a retirement corpus and a high risk appetite. Which category of scheme is generally the most suitable core holding for this investor?

An equity diversified fund such as a flexi cap fund is the most suitable, because a 20-year horizon and high risk appetite allow the investor to ride out volatility and seek higher long-term growth, unlike low-return short-term debt categories.

  1. AOvernight fund
  2. BLiquid fund
  3. CEquity diversified fund such as a flexi cap fundCorrect
  4. DUltra short duration fund

Explanation

A long horizon and high risk tolerance suit equity-oriented schemes, which have historically offered better inflation-beating returns over long periods. Overnight, liquid and ultra short funds are meant for parking surplus money for very short periods and would give low long-term growth.

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