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NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Regulatory, Governance and Ethical Aspects of Portfolio Managers

Which of the following is true about a discretionary portfolio manager as defined in the SEBI (Portfolio Managers) Regulations?

A discretionary portfolio manager may independently decide on investment and management of each client's portfolio according to the agreement, without per-trade consent. Funds are managed individually for each client, not pooled, and returns cannot be guaranteed.

  1. AThe manager needs client consent for every trade
  2. BThe manager may exercise discretion over investment or management of the portfolio, per the agreement and client's interestCorrect
  3. CThe manager can pool all client funds into a single scheme
  4. DThe manager may guarantee returns if the client agrees

Explanation

A discretionary manager individually and independently manages each client's funds as per the agreement, without seeking consent for each trade. Pooling of funds and guaranteeing returns are not permitted.

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