NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors Certification Examination

The examination consists of 80 multiple choice questions and 3 case-based questions. The assessment structure is as follows:

Total Multiple Choice Questions 80 x 1 mark = 80 marks
3 Case-based Questions
[2 cases (each case with 5 questions of 1 mark each)] 2 x 5 x 1 = 10 marks
[1 case (with 5 questions of 2 marks each] 1 x 5 x 2 = 10 marks

The examination should be completed in 2 hours. The passing score for the examination is 60 percent. There shall be negative marking of 25 percent of the marks assigned to a question.

Test Details

1770/- Inclusive of GST. Payment Gateway Charges extra.

80 multiple choice questions of 1 mark each, 2 caselets with 5 MCQs each of 1 mark each and 1 caselet with 5 MCQs of 2 marks each.

Negative marking – 25% of the marks assigned to the question.

Passing Certificate will be issued only to those candidates who have furnished/ updated their Income Tax Permanent Account Number (PAN) in their registration details.

Syllabus Outline with Weights

Unit No. Unit Name Weightages %
Unit 1 Investments 5%
Unit 2 Introduction to securities markets 3%
Unit 3 Investing in stocks 8%
Unit 4 Investing in fixed income securities 8%
Unit 5 Derivatives 5%
Unit 6 Mutual Funds 5%
Unit 7 Role of portfolio managers 13%
Unit 8 Operational aspects of portfolio managers 13%
Unit 9 Portfolio management process 13%
Unit 10 Performance measurement and evaluation of portfolio managers 13%
Unit 11 Taxation 5%
Unit 12 Regulatory, governance and ethical aspects of portfolio managers 9%

Syllabus

I: Investment Landscape

  • Define Investment
  • Investment versus Speculation
  • Know the objectives of Investments
  • Estimating the required rate of return
  • Types of Investments
  • Channels for making investments

II: Introduction to Securities Markets

  • Define Securities Markets
  • Primary and secondary securities markets
  • Market participants and their activities

III: Investing in Stocks

  • Equity as an investment
  • Diversification of risk through equity instruments
  • Risks of equity investments
  • Overview of Equity Market
  • Equity research and stock selection
  • Technical Analysis
  • Understanding corporate governance

IV: Investing in Fixed Income Securities

  • Overview of Fixed Income Securities
  • Bond Characteristics
  • Determinants of bond safety
  • Analysis and Valuation of Bonds
  • Measuring price volatility for bonds
  • Determining Duration

V: Derivatives

  • Definition of Derivatives
  • Types of derivative products
  • Structure of derivative markets
  • Purpose of Derivatives
  • Introduction to Commodity and Currency Futures and Options
  • Underlying concepts in derivatives

VI: Mutual Fund

  • Concept and Role of Mutual Fund
  • Benefits of investing through mutual funds
  • Legal Structure of Mutual Fund in India
  • Working of mutual funds
  • Types of Mutual fund products
  • Processes of investing in mutual funds
  • Legal and Regulatory Framework – Key SEBI Regulation
  • Fact Sheet – Scheme Related Information
  • Net Asset Value, Total Expense Ratio, Pricing of Units
  • Mutual Fund Scheme Performance
  • Key performance measures

VII: Role of Portfolio Managers

  • Overview of portfolio managers in India
  • Types of portfolio management services
  • Organizational Structure of PMS in India
  • Registration requirements of a Portfolio Manager
  • General Responsibilities of a Portfolio Manager
  • Administration of investor’s portfolio

VIII: Operational Aspects of Portfolio Managers

  • Entities which can invest in PMS
  • Disclosures to the prospective clients
  • Process of on boarding of clients
  • Direct On-boarding in PMS
  • Liability in case of Default
  • Redressal of Investors grievances
  • Disclosures to the regulator
  • Costs, expenses and fees of investing in PMS

IX: Portfolio Management Process

  • Importance of Asset allocation decision
  • Understanding correlation across asset classes and securities
  • Steps in Portfolio Management Process
  • Asset allocation decision
  • Strategic versus Tactical Asset Allocation
  • Re-balancing of Portfolio

X: Performance measurement and evaluation of Portfolio Managers

  • Parameters to define performance – risk and return
  • Rate of return measures
  • Risk measures
  • Risk adjusted return
  • Performance Evaluation: Benchmarking and peer group analysis
  • Performance attribution analysis
  • Performance reporting to the Investor
  • Due Diligence and Portfolio Manager selection
  • Global Investment Performance Standard (GIPS)
  • GIPS Advertisement Guidelines

XI: Taxation

  • Taxation of investors
  • Taxation of various streams of income
  • Section 9A of Income Tax

XII: Regulatory, Governance and Ethical Aspects of Portfolio Managers

  • Prevention of Money Laundering Act, 2002
  • SEBI (Prohibition of Insider Trading) Regulation 2015
  • SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003
  • Securities and Exchange Board of India (Portfolio Managers) Regulations, 2020
  • Best practices for portfolio Managers
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