Skip to content

NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Operational Aspects of Portfolio Managers

In a discretionary Portfolio Management Service, who takes the investment decisions for the client's portfolio, as per the arrangement with the portfolio manager?

In a discretionary PMS the portfolio manager takes investment decisions at its own discretion for the client's benefit, within the agreement. Client approval of each trade belongs to the non-discretionary model, and neither custodians nor distributors decide investments.

  1. AThe portfolio manager, at its sole discretion, in the client's interestCorrect
  2. BThe client, who must approve every trade before execution
  3. CThe custodian, based on settlement convenience
  4. DThe distributor, based on the client's risk profile

Explanation

In discretionary PMS the portfolio manager exercises independent discretion over investment and management of the funds or securities, in accordance with the portfolio management agreement. In a non-discretionary service the client gives the decisions, so the option requiring client approval for every trade describes the wrong service type.

Did you get it right without looking?

One question tells you little. A timed set on Operational Aspects of Portfolio Managers shows your real accuracy, how long you take and where you lose marks.

Practise Operational Aspects of Portfolio ManagersFree diagnostic mock

More Operational Aspects of Portfolio Managers questions