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

Which of the following best describes the purpose of the PMS disclosure document that a portfolio manager must provide to a prospective client?

The disclosure document gives the prospective client key information about the manager, strategies, risks, fees and past performance so the client can make an informed decision. It guarantees no returns and does not replace the signed agreement.

  1. ATo give the client information to help decide whether to engage the portfolio managerCorrect
  2. BTo guarantee a minimum return on the portfolio
  3. CTo transfer the portfolio manager's liabilities to the client
  4. DTo substitute for the agreement signed between the parties

Explanation

The disclosure document contains details such as the manager's background, investment approach, risks, fees and performance, helping the client make an informed decision. It does not guarantee returns, and it is in addition to, not a substitute for, the portfolio management agreement.

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