NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Portfolio Manager
In a discretionary portfolio management service, which statement is correct?
In discretionary PMS the portfolio manager independently decides what to buy and sell on the client's behalf, within the terms of the portfolio management agreement, and the client bears the investment risk. Client consent per trade is not required.
- AThe portfolio manager needs the client's prior consent for every individual trade
- BThe portfolio manager exercises independent discretion over investment decisions on behalf of the client, as per the agreementCorrect
- CThe portfolio manager only advises and the client executes all trades
- DThe portfolio manager may invest only in listed equity shares
Explanation
In the discretionary service the manager takes investment decisions independently at the client's risk, within the agreement. Option A and C describe non-discretionary or advisory services. Discretionary portfolios are not limited to listed equity.
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