NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Portfolio Management Process
Which document records a client's return objective, risk tolerance, time horizon, liquidity needs and constraints to guide the portfolio manager?
The investment policy statement records the client's return objectives, risk tolerance, time horizon, liquidity needs and constraints. It acts as a guide for the portfolio manager's asset allocation and security selection, unlike the disclosure document, which describes the manager itself.
- AInvestment policy statementCorrect
- BDisclosure document
- CContract note
- DClient account statement
Explanation
The investment policy statement summarises the client's objectives and constraints and guides the manager's decisions. The disclosure document describes the portfolio manager's business and fees. A contract note confirms trades and a statement reports holdings.
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