NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Portfolio Manager
Which one of the following best describes a non-discretionary portfolio management service?
In a non-discretionary portfolio management service, the manager makes investments only as directed by the client, who takes the investment decisions while the manager executes them. This contrasts with discretionary services, where the manager decides independently on the client's behalf under the agreement.
- AThe manager invests at own discretion without consulting the client, in any security
- BThe manager invests only as per the client's directions and the investment decisions are made by the clientCorrect
- CThe manager pools funds of all clients into a single scheme with units issued
- DThe manager only provides advice and cannot execute any transactions
Explanation
In non-discretionary services, the portfolio manager executes transactions only with the client's prior directions, so the choices are the client's. Discretionary service gives the manager independent discretion. Pooling with units describes a mutual fund, not PMS.
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