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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Investor Services

An investor in a mutual fund scheme wants to give someone the right to receive the units or redemption proceeds in the event of the investor's death. Which facility should the investor use?

The investor should use the nomination facility. It allows the unit holder to name a person who will receive the units or redemption proceeds after the holder's death, whereas transfer plans, powers of attorney or plan switches serve different purposes and do not achieve this.

  1. ANominationCorrect
  2. BSystematic transfer plan
  3. CPower of attorney in favour of the distributor
  4. DSwitch to a direct plan

Explanation

Nomination lets a unit holder name a person who will receive the units or redemption proceeds on the holder's death. A systematic transfer plan moves money between schemes and does nothing on death. A power of attorney to a distributor is not a nomination and lapses on the holder's death. Switching to a direct plan only changes the plan type.

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