Portfolio Management Services (PMS) Distributors Free Demo Test 3

The KYC process also requires verification of the PAN card. It is mandatory for all investors who wish to invest in PMS to complete KYC formalities.

The disclosure document contains details concerning –

1. Risk arising from the investment approach, investment objective, investment strategy, and asset allocation

2. Risk arising out of non-diversification, if any

3. Statement to the effect that securities investments are subject to market risks etc

(Details of the business risk of group companies are not required to be mentioned in the disclosure document)

Savings is the difference between money earned and money spent. The money in the savings account is the savings of the investor. It cannot be called an investment as an investment is the process of making the savings work to generate a return – eg. Investing in a Mutual fund etc. It is common to use the terms Savings and Investment interchangeably.

However, they are not the same.

Saving is just the difference between money earned and money spent. Investment is the current commitment of savings with an expectation of receiving a higher amount of committed savings. Investment involves some specific period. It is the process of making the savings work to generate a return.

For calculating net worth, all the assets the investor owns, i.e. the house, the car, the investments in stocks, bonds & mutual funds, balance in the savings accounts, etc. are to be recorded at the estimated market value. Then all the liabilities need to be subtracted from the assets. Liabilities may include the outstanding car loan amount, credit card loans, home, etc., The difference between the value of assets and the liability is Net worth.

The fixed amount paid by a bond issuer to the bondholder at regular intervals until maturity is called the coupon. It represents the interest income earned by the investor on the bond’s face value. This payment is usually made annually or semi-annually, depending on the bond’s terms. The coupon rate is set at the time of issuance and remains fixed throughout the bond’s life.

As per SEBI rules – Every Portfolio Manager shall appoint a compliance officer who shall be responsible for monitoring the compliance of the Act, rules and regulations, notifications, guidelines, instructions, etc., issued by SEBI or the Central Government and for redressal of investors’ grievances. The compliance officer shall immediately and independently report to SEBI any non-compliance observed.

Statutory Charges means any charge imposed by state or federal government legislation.

Notary fees are payable to the notary public at a local court / Sub-registrar office to get a deed/documents notarised.

Past performance or beating the benchmark should not be the only criteria as selecting a portfolio manager is a complex process. It involves analyzing a lot more than just returns. Investors are expected to carry out a detailed due diligence process before selecting their portfolio managers.

The due diligence involves thorough quantitative and qualitative analysis of the portfolio manager’s reputation, key personnel, and operations. Investors should understand the investment process, investment strategies, and investing styles to appreciate how the investment returns are generated and gauge the likelihood of the performance persisting in the future for the given investment process.

Portfolio Managers can be evaluated on the basis of their investment philosophy, investment approach, investment process, strategies, styles, and past performance compared against a benchmark or managers’ universe.

Portfolio management services can be classified on the basis of product class such as – 1. Equity-based PMS 2. Fixed Income-based PMS 3. Commodity PMS 4. Mutual Fund PMS 5. Multi Asset-based PMS There is no product class such as Forex PMS.

As per SEBI (Portfolio Managers) Regulations – Obligation and Responsibilities of Eligible Fund Managers: An eligible fund manager shall be required to keep the funds of eligible investment funds in scheduled commercial banks – Provided the requirement of compliance with this sub-regulation would not arise in case an eligible investment fund does not intend to invest in Indian securities.