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

An investor in her early twenties with a stable job, no dependants and a 25-year horizon wants to build a retirement corpus. Which scheme category is most suitable as the core holding for her goal?

A diversified equity fund is most suitable because a 25-year horizon and high risk capacity let the investor ride out volatility and earn higher long-term returns. Overnight, liquid and ultra short funds are meant for short-term parking and would give inadequate growth for retirement.

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

Explanation

A long horizon and high risk capacity suit equity-oriented schemes, which have the highest long-term growth potential. Overnight, liquid and ultra short funds are low-return, short-term parking options that would not beat inflation meaningfully over 25 years.

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