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

An investor in his late fifties wants regular income, has low risk tolerance and needs to preserve capital over a 2-year horizon. Which type of scheme would a distributor most suitably consider for the bulk of this investor's money?

A short or low duration debt fund of high credit quality suits this investor, because the person has low risk tolerance, a short two-year horizon and wants capital preservation with income. Sectoral, small cap and thematic equity funds are too volatile for such a need.

  1. ASectoral equity fund
  2. BSmall cap fund
  3. CShort duration or low duration debt fund of high credit qualityCorrect
  4. DThematic equity fund

Explanation

Low risk tolerance, capital preservation and a short horizon point to high-credit-quality short-term debt funds. Equity categories such as sectoral, small cap and thematic carry high volatility that can cause losses over 2 years.

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