NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Role of Portfolio Managers
A PMS client invests Rs 60 lakh at the start of the year. At year end the portfolio value is Rs 69 lakh before fees, and the manager charges a fixed fee of Rs 1.2 lakh for the year. Assuming no flows, what is the net return for the client?
The net return is 13.0%. The portfolio gained Rs 9 lakh on Rs 60 lakh, then the Rs 1.2 lakh fee reduces the gain to Rs 7.8 lakh, and Rs 7.8 lakh divided by Rs 60 lakh equals 13 percent. Ignoring the fee would wrongly give 15 percent.
- A13.0%Correct
- B15.0%
- C12.0%
- D10.0%
Explanation
Gain before fees = 69 - 60 = Rs 9 lakh. Net gain = 9 - 1.2 = Rs 7.8 lakh. Net return = 7.8/60 = 13.0%. Option B ignores fees, giving 15%. Option C wrongly deducts fee twice or similar miscalculation.
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