NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Role of Portfolio Managers
Under SEBI rules, which of the following is a requirement relating to a portfolio manager's fee structure?
Portfolio managers may charge a fixed fee, a return-based fee, or a combination, but the structure must be set out in the client agreement and disclosed. SEBI does not restrict PMS to one structure or allow undisclosed fees.
- AFees charged to clients must be as per the agreement and may be fixed, return-based, or a combination, subject to disclosureCorrect
- BOnly a fixed fee is permitted, return-based fees are prohibited
- COnly a profit-sharing fee is permitted, with no fixed component
- DFees need not be disclosed until the end of the financial year
Explanation
The regulations allow fixed fee, return-based fee or a combination, provided they are stated in the agreement and disclosed. Prohibition of either structure is incorrect, and non-disclosure is not allowed.
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