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NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Collective Investment Vehicles

Which of the following is a key difference between a mutual fund and a PMS for a distributor explaining them to a client?

A mutual fund pools investor money into a common portfolio valued at a single NAV, whereas a PMS usually holds securities in each client's own individual account. Both are SEBI regulated, and PMS has a higher minimum investment.

  1. AA mutual fund holds securities in the investor's own demat account, whereas a PMS pools all money in one scheme
  2. BA mutual fund is a pooled vehicle with a common NAV, whereas a discretionary PMS typically holds securities in the individual client's own accountCorrect
  3. CNeither is regulated by SEBI
  4. DA PMS always has lower minimum investment than a mutual fund

Explanation

Mutual funds pool money and unit holders share a common portfolio valued at NAV. A PMS typically manages a separate portfolio of securities in each client's own account. The other statements reverse this, ignore regulation, or misstate minimum investments.

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