NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Role of Portfolio Managers
In a discretionary portfolio management service, which statement is correct?
In discretionary PMS the portfolio manager independently decides and executes investments on the client's behalf, within the terms of the portfolio management agreement. Per-trade client consent is the feature of non-discretionary services, not discretionary ones.
- AThe portfolio manager takes investment decisions independently on behalf of the client, in accordance with the agreementCorrect
- BThe portfolio manager can invest only after obtaining client approval for each transaction
- CThe portfolio manager only gives advice and the client executes trades
- DThe client's funds are pooled in a single scheme with a NAV declared by a trustee
Explanation
In discretionary PMS the manager has the authority to choose investments and execute them for the client's individual portfolio within the agreed mandate. Per-trade approval describes non-discretionary PMS, advice-only describes advisory service, and pooling with a trustee describes mutual funds.
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