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NISM Series XXI-A: Portfolio Management Services (PMS) Distributors exam preparation
What distributors need to know to offer portfolio management services: how PMS works, who it suits, how it is measured, taxed and regulated.
NISM Series XXI-A exam pattern
NISM Series XXI-A syllabus, unit by unit
The exam covers 12 units. The percentage is the share of questions each unit usually carries, so spend your time in that proportion.
Unit 1 Investments7%
The language of investing: asset classes, risk, return and the time value of money. Foundation for every later unit.
- Asset classes and risk-return.
- Time value and compounding.
- Inflation and real return.
Unit 2 Introduction to securities markets5%
The markets in which portfolio managers operate and the regulators who oversee them.
- Primary and secondary markets.
- Market participants and regulators.
Unit 3 Investing in stocks10%
How portfolio managers analyse and select equity investments: valuation, style and risk.
- Fundamental ratios and valuation.
- Growth versus value; large versus small.
- Equity risks.
Unit 4 Investing in fixed income securities5%
Bonds and debt instruments in a portfolio: yield, duration and credit.
- Bond features.
- Yield and duration.
- Credit and interest-rate risk.
Unit 5 Derivatives5%
Derivatives in portfolios: hedging and the risks of leverage.
- Futures and options.
- Hedging.
- Leverage risk.
Unit 6 Collective investment vehicles5%
Mutual funds, ETFs and AIFs compared with PMS.
- Mutual funds and ETFs.
- AIFs.
- PMS versus mutual funds.
Unit 7 Role of portfolio managers10%
What a portfolio manager does and the three types of service.
- Discretionary, non-discretionary and advisory.
- Investment approach.
- Role of distributors.
Unit 8 Operational aspects of portfolio managers13%
How a PMS actually operates: agreements, onboarding, fees, custody and reporting.
- Portfolio management agreement.
- Fees and exit load.
- Custodian, reporting and disclosure.
Unit 9 Portfolio management process15%
The core method: objectives, asset allocation, security selection, implementation and review. The heaviest unit.
- Steps of the process.
- Asset allocation and rebalancing.
- Risk management.
- Behavioural traps.
Unit 10 Performance measurement and evaluation of portfolio managers10%
How to judge a PMS: returns, benchmarks, risk-adjusted measures and standard reporting.
- TWRR and annualised return.
- Benchmark and alpha.
- Sharpe, drawdown, capture ratios.
Unit 11 Taxation5%
How PMS income is taxed in the client's hands.
- Capital gains and business income.
- Dividends and TDS.
- Reporting.
Unit 12 Regulatory, governance and ethical aspects of portfolio managers10%
SEBI's Portfolio Managers Regulations, the conduct of managers and the distributor's duties.
- Registration and net worth.
- Code of conduct.
- Distributor obligations.
- Grievance redressal.
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 “Investor charter”?
- Portfolio managers must provide an investor charter explaining the rights and obligations of clients and the grievance process.
- Large caps are generally more stable and liquid; small caps offer higher growth potential with more volatility and lower liquidity.
- Maximum drawdown is the largest peak-to-trough decline in portfolio value, showing worst-case loss experienced.
- Value investing buys stocks trading below estimated intrinsic value, expecting the price to converge.
Q2. Which term is described here? Brokerage and other expenses on transactions, such as custodian and audit fees, are charged to the client as disclosed.
- Value investing
- Mutual fund
- Brokerage and expenses
- Diversification
Q3. Which term is described here? Diversification spreads investments across securities and asset classes to reduce specific risk.
- Equity risks
- Code of conduct for distributors
- Tactical asset allocation
- Diversification
Q4. Which term is described here? Quality investing favours companies with high returns on capital, stable earnings and strong governance.
- Time value of money
- Quality investing
- Leverage risk
- Dividend
How to prepare for NISM Series XXI-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 XXI-A?
The NISM Series XXI-A (Portfolio Management Services (PMS) Distributors) exam has 100 multiple-choice questions carrying 100 marks, to be answered in 120 minutes.
What is the passing score for NISM Series XXI-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 XXI-A?
Yes. The negative marking is 10% of marks. Practise leaving a question blank when you are unsure.
Is the NISM Series XXI-A study guide free?
Yes. UpperCrust Academy gives a free 40-page study guide PDF for NISM Series XXI-A, written unit by unit.
Are the NISM Series XXI-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.
More NISM exams
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.