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NISM Series XIX-A: Alternative Investment Funds (Category I and II) Distributors exam preparation
Private equity, venture, debt and real-estate funds explained for distributors: structure, fees, due diligence, documents, valuation and tax.
NISM Series XIX-A exam pattern
NISM Series XIX-A syllabus, unit by unit
The exam covers 13 units. The percentage is the share of questions each unit usually carries, so spend your time in that proportion.
Unit 1 Overview of alternative investments5%
What counts as alternative, how it differs from listed equity and debt, and the main strategies.
- Characteristics of alternatives.
- Private equity, venture, hedge, real assets.
Unit 2 Alternative investment funds in India5%
The Indian AIF market, its categories and the investors it serves.
- Category I, II and III.
- Eligible investors and limits.
Unit 3 Concepts in the AIF industry5%
The vocabulary of private funds: commitment, drawdown, J-curve, GP and LP, and fees.
- Commitment and drawdown.
- J-curve.
- Carry, hurdle and catch-up.
Unit 4 Regulatory framework: Indian context10%
The SEBI (Alternative Investment Funds) Regulations, 2012 and what they require of funds, sponsors, managers and distributors.
- Registration and categories.
- Investment conditions.
- Sponsor commitment and tenure.
- Obligations of distributors.
Unit 5 AIF structuring10%
Legal forms, fund-of-funds, feeders and who the parties to a fund are.
- Trust, LLP and company.
- Parties to an AIF.
- Pass-through and feeder structures.
Unit 6 Risk and return: investor and fund perspective10%
The risks specific to private funds, how returns are measured and what they depend on.
- Risks: liquidity, valuation, concentration, manager.
- Return measures and drivers.
Unit 7 Investment process and governance of funds10%
How a fund finds, chooses, monitors and exits investments, and how it governs itself.
- Deal sourcing to exit.
- Investment committee and advisory committee.
- Conflicts and key-person clauses.
Unit 8 Fund due diligence: investor perspective15%
The most important unit for a distributor: how to evaluate a fund before recommending it. Expect scenario questions.
- Manager track record and team.
- Strategy and terms review.
- Operational and legal due diligence.
- Red flags.
Unit 9 Legal documents and negotiations: investor perspective10%
What documents govern an AIF investment and which clauses protect investors.
- PPM, subscription and contribution agreements.
- Trust deed and IMA.
- Side letters and key clauses.
Unit 10 Fund monitoring, reporting and exit5%
Staying informed after investing and how exits return money.
- Reporting.
- Exit routes.
- Winding up.
Unit 11 Valuation5%
How private assets are valued and why it matters for NAV and fees.
- Valuation methods.
- Independent valuation.
- Frequency and guidelines.
Unit 12 Taxation: India specific5%
How AIFs and their investors are taxed.
- Pass-through for Category I and II.
- Category III taxation.
- Character of income.
Unit 13 Good practices5%
Conduct, ethics and the duties of distributors and managers.
- Distributor conduct.
- Disclosure and suitability.
- KYC and AML.
Try 4 sample questions
These are from Mock 1. Open the free mock to see the correct answer and the reason behind each one.
Q1. Which statement best describes “Direct plan”?
- AIFs must provide an option for investors to invest directly, without a distributor, and distribution commissions should be transparent.
- Category II AIFs, such as private equity and debt funds, do not undertake leverage except for day-to-day operational needs and are not given specific incentives.
- Distributors of AIFs must hold the NISM XIX-A certification and follow the code of conduct, including disclosure and suitability.
- Funds set up in GIFT City's IFSC can pool money in foreign currency and are governed by a separate regulatory framework.
Q2. Which statement best describes “Conflict of interest policy”?
- An AIF is a privately pooled investment vehicle that raises money from investors for investing as per a defined policy, regulated by SEBI.
- The manager must have a policy to identify, disclose and manage conflicts, such as allocating deals between funds.
- A commitment is the total amount an investor agrees to invest in the fund, to be called in instalments over time.
- Category I and II AIFs enjoy pass-through status: income other than business income is taxed in the investors' hands, retaining its character.
Q3. Which term is described here? An MFN clause lets an investor elect the better terms granted to other investors in comparable side letters.
- Strategy fit
- Minimum investment
- Most-favoured-nation clause
- Ongoing manager review
Q4. Which statement best describes “Alignment of interest”?
- Alignment is shown by meaningful manager commitment, performance-linked pay and fees that reward results rather than assets alone.
- Reviewing the fund's concentration by company, sector and vintage reveals risks of overexposure.
- Screening filters opportunities against the fund's strategy, size, sector and risk criteria before detailed work begins.
- Investors, especially large ones, negotiate on fees, governance rights, reporting, key-person triggers and transfer terms.
How to prepare for NISM Series XIX-A
- Download the study guide and read the first three pages.
- Study the biggest units first. Their weight shows on this page.
- Take Mock 1 after one pass through the guide.
- Move to the next mock only when you clear the pass mark by 15 marks.
- Redo every wrong answer. Each one names its unit.
The app also lists your weak units after each mock and runs in English, Hindi or Gujarati. Mock tests and study material are in English.
Frequently asked questions
How many questions are there in NISM Series XIX-A?
The NISM Series XIX-A (Alternative Investment Funds (Category I and II) Distributors) exam has 100 multiple-choice questions carrying 100 marks, to be answered in 120 minutes.
What is the passing score for NISM Series XIX-A?
The pass mark is 60%. Aim to clear 75% in practice mocks before you book the real exam.
Is there negative marking in NISM Series XIX-A?
Yes. The negative marking is 25% of marks. Practise leaving a question blank when you are unsure.
Is the NISM Series XIX-A study guide free?
Yes. UpperCrust Academy gives a free 45-page study guide PDF for NISM Series XIX-A, written unit by unit.
Are the NISM Series XIX-A mock tests free?
Yes. You get 5 full-length mock tests with the answer and the reason for every question. Sign in once with your mobile number or Google to start.
Is this affiliated with NISM?
No. UpperCrust Academy is independent preparation material from UpperCrust Wealth. Confirm the latest syllabus and exam rules on the official NISM website.
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UpperCrust Academy is independent study material from UpperCrust Wealth. It is not affiliated with NISM, SEBI or AMFI. For education only. Not investment advice. Always confirm the latest syllabus and rules on the official NISM website.