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

Which of the following fee structures is permitted for a portfolio manager to charge clients under SEBI's PMS regulations?

SEBI permits portfolio managers to charge a fixed fee, a variable fee linked to portfolio performance, or a combination of the two, as agreed and disclosed in the client agreement. Fee options are not limited to only fixed or brokerage-based charges.

  1. AFixed fee, variable fee based on portfolio performance, or a combination of bothCorrect
  2. BOnly a fixed fee, with no performance-linked component
  3. COnly a brokerage-linked commission on trades
  4. DUpfront fees collected from the client and not returned on early exit, with no cap

Explanation

Regulations allow fixed, performance-based (return-linked) or hybrid fees, disclosed in the agreement. Restricting to fixed only or brokerage only is incorrect. Upfront fees are restricted, and the portfolio manager cannot charge them without limit.

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