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

In the operations of a portfolio manager, which function is mainly performed by the custodian appointed for a PMS client's securities?

The custodian safeguards the client's securities and assists in settling trades. It keeps client assets separate from the portfolio manager's own assets. Investment decisions are made by the portfolio manager, not the custodian, and the custodian does not market the strategy or audit net worth.

  1. ATaking investment decisions on the client's behalf
  2. BSafekeeping of the client's securities and settling tradesCorrect
  3. CMarketing the PMS strategy to new investors
  4. DAuditing the portfolio manager's net worth

Explanation

A custodian holds the client's securities and handles settlement-related activities, keeping assets separate from the portfolio manager's own assets. Investment decisions stay with the portfolio manager, and marketing and net worth audits are not custodian functions.

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