NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Portfolio Manager
Mr. Iyer invests Rs 20,00,000 in a discretionary PMS. After one year the portfolio value is Rs 23,00,000 before fees. The fixed fee is 2% of the initial corpus, charged at year end and paid from the portfolio. What is his net return for the year?
The net return is 13.0%. The gross gain of Rs 3,00,000 is 15% of the Rs 20,00,000 corpus, and the fee of 2% (Rs 40,000) is deducted, leaving Rs 2,60,000, which is 13% of the initial investment.
- A13.0%Correct
- B15.0%
- C17.0%
- D12.5%
Explanation
Gross gain = 3,00,000, which is 15%. Fee = 2% of 20,00,000 = 40,000. Net gain = 2,60,000, so net return = 2,60,000/20,00,000 = 13.0%. Choosing 15% ignores the fee, and 17% wrongly adds the fee instead of subtracting it.
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