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

In the context of portfolio management services in India, which of the following best describes a discretionary portfolio manager?

A discretionary portfolio manager independently chooses investments and manages the client's funds or securities under the portfolio management agreement, without needing client approval for each trade, and the assets are held in the client's own name.

  1. AOne who manages the client's funds with independent discretion on investment decisions, as per the agreement, in the client's nameCorrect
  2. BOne who only gives investment advice and leaves execution entirely to the client
  3. COne who executes trades only on the client's specific instruction for each transaction
  4. DOne who pools client money into a single scheme with units issued to investors

Explanation

A discretionary portfolio manager exercises independent discretion over investment and management of the client's funds or securities, as per the contract. A non-discretionary manager acts only on client directions, and advice-only is the adviser's role. Pooling into units describes a mutual fund, not a PMS.

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