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NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Investments

Which feature best distinguishes a discretionary PMS from a non-discretionary PMS?

In a discretionary PMS, the portfolio manager takes investment decisions on the client's behalf without needing approval for each trade, as agreed in the contract. In a non-discretionary PMS, the manager advises and executes only after the client consents to each transaction.

  1. AThe portfolio manager decides investments on the client's behalf without prior consent for each transactionCorrect
  2. BThe client takes every investment decision and the manager only executes it
  3. CThe funds are pooled into one single scheme with a common NAV
  4. DThe portfolio manager is barred from investing in listed equity

Explanation

In discretionary PMS the manager exercises independent discretion over investment and management of the client's portfolio under the agreement. In non-discretionary PMS the manager acts only with the client's prior consent for each transaction. Pooling into a single NAV describes mutual funds, not PMS.

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