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

Which of the following is a key feature of a non-discretionary PMS as compared with a discretionary PMS?

In a non-discretionary PMS the portfolio manager advises the client and executes transactions only with the client's consent or instruction, so the client retains the final decision on each trade. This distinguishes it from the discretionary service, where the manager decides independently.

  1. AThe manager decides all trades without consulting the client
  2. BInvestment decisions are taken by the manager but executed only with the client's consent or instructionCorrect
  3. CThe portfolio is always invested only in debt
  4. DThe client cannot withdraw funds during the tenure

Explanation

In non-discretionary PMS the manager advises and executes only after the client's consent or instruction, so the final decision rests with the client. Deciding trades without consultation is the discretionary feature, so that option is wrong. Asset class and withdrawal terms are set in the agreement, not by the PMS type.

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