Skip to content

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

Under the SEBI (Portfolio Managers) Regulations, a portfolio manager who manages a client's funds on a discretionary basis is one who:

A discretionary portfolio manager decides independently how to invest the client's funds, as per the portfolio management agreement, without needing the client's approval for each transaction. Non-discretionary managers need client instructions, and PMS accounts are individually held rather than pooled.

  1. AActs only on specific instructions of the client for every transaction
  2. BExercises independent discretion in investing the client's funds as per the agreement, without seeking approval for each transactionCorrect
  3. COnly advises the client and never executes trades
  4. DPools client money into a single scheme with a common NAV like a mutual fund

Explanation

In discretionary PMS the manager takes investment decisions independently within the terms of the agreement, individually for each client's portfolio. Option A describes non-discretionary PMS, and option C describes pure advisory. Option D is wrong because PMS funds are held in separate client-wise portfolios, not a pooled scheme.

Did you get it right without looking?

One question tells you little. A timed set on Role of Portfolio Managers shows your real accuracy, how long you take and where you lose marks.

Practise Role of Portfolio ManagersFree diagnostic mock

More Role of Portfolio Managers questions