NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Operational Aspects of Portfolio Managers
In the operations of a portfolio manager, what is the main role of the custodian appointed for a PMS client's portfolio?
The custodian safeguards the client's securities and supports settlement and corporate action processing. It does not take investment decisions, market the strategy or compute distributor fees; those are the portfolio manager's or distributor's functions, which keeps asset custody separate from management.
- ATaking investment decisions on behalf of the client
- BSafekeeping of the client's securities and handling settlement-related holding of assetsCorrect
- CMarketing the PMS strategy to new investors
- DCalculating the performance fee payable to the distributor
Explanation
A custodian holds securities in safekeeping and supports settlement and corporate action processing for the client's portfolio. Investment decisions rest with the portfolio manager, not the custodian. Marketing and fee calculation are not custodial functions.
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