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NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Regulatory, Governance and Ethical Aspects of Portfolio Managers

Under SEBI PMS regulations, which of the following is correct regarding the investment approaches and disclosure to clients by a portfolio manager?

A portfolio manager must give clients periodic reports, at least quarterly, showing portfolio composition, transactions undertaken, and fees and expenses charged. Changing the investment approach silently or reporting only annually would fall short of SEBI's disclosure and transparency requirements.

  1. AThe portfolio manager need not provide any periodic reports to clients
  2. BThe portfolio manager must furnish periodic reports to clients, including portfolio composition, transactions and fees charged, at least on a quarterly basisCorrect
  3. CThe portfolio manager may change the investment approach without informing clients
  4. DThe portfolio manager need only report to clients annually after the audit

Explanation

Portfolio managers must give clients periodic reports covering portfolio holdings, transactions, and fees and expenses, at intervals not exceeding the period prescribed by SEBI, which includes at least quarterly reporting. Skipping reports, silent changes of approach, or annual-only reporting do not meet the requirement.

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