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

Which statement about the fees a portfolio manager may charge, as permitted under SEBI PMS rules, is correct?

SEBI allows portfolio managers to charge fixed fees, return-based fees, or a combination, as agreed with the client. No entry load may be charged to the client, and any exit load must stay within the prescribed limits. Fees need not be purely return-based.

  1. AEntry load may be charged to the client as a percentage of the corpus
  2. BExit load can be charged only in the first month
  3. CFees can be fixed, return-based, or a combination, but no entry load is allowed, and exit load is limited to the prescribed scheduleCorrect
  4. DFees must always be purely return-based with no fixed component

Explanation

Regulations permit fixed, performance-linked or hybrid fee structures, disclosed in the agreement. Entry load is prohibited, and exit loads are limited under the SEBI prescribed schedule. A purely return-based requirement does not exist, so that option is wrong.

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