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

A portfolio manager offers a discretionary PMS. What best describes the role of the portfolio manager in this arrangement?

In a discretionary PMS the portfolio manager takes investment decisions independently on the client's behalf, in the client's interest and within the agreed mandate. The client does not approve each trade, unlike non-discretionary services, and securities remain held in the client's own account.

  1. AActs only on the client's instructions for each trade
  2. BTakes investment decisions independently on behalf of the client, in the client's interest, as per the agreementCorrect
  3. COnly provides research reports and does not execute trades
  4. DPools client money into a single scheme with units issued

Explanation

In discretionary PMS the manager exercises independent discretion over choice and timing of investments, within the portfolio management agreement. Acting only on client instructions describes non-discretionary PMS. Pooled units describe mutual funds, whereas PMS holds securities in the client's own name.

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