Curriculum – NISM-Series-XXI-B: Portfolio Management Services (PMS) Distributors Certification Examination
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
Introduction to Securities Markets
- Define Securities Markets
- Primary and secondary securities markets
- Market participants and their activities
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
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
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
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
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
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
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
Taxation
- Taxation of investors
- Taxation of various streams of income
- Section 9A of Income Tax
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
E. Best practices for portfolio Managers
Introduction to Indices
- Introduction to Index
- Uses of Indices
- Factors differentiating the indices
- How indices are created – Index Methodologies
- Stock market indices
- Bond market indices
- Stock-Bond (Composite) Indices
Behavioral Finance
- Behavioral finance vs standard finance
- How individuals make decision?
- Categorization of biases
- Fusion investing
- Behavioral finance and market anomalies
Introduction to Modern Portfolio Theory
- Framework for constructing portfolios – Modern Portfolio Theory
- How individuals make decision?
- Assumptions of the theory
- Expected rate of return for individual security
- Variance of return for individual security
- Expected rate of return for a portfolio
- Variance of return for a portfolio
- Graphical presentation of portfolio risk/return of two securities
- Concept of Efficiency Frontier
- Portfolio Optimization process
- Estimation issues
Introduction to Capital Market Theory
- Capital market theory
- Assumptions of capital market theory and the implications of relaxing these assumptions
- Capital market line
- Diversification of risk and market portfolio
- Types of risk – market and non-market risk
- Capital asset pricing model, CAPM
- Security market line
- Concept of market portfolio
- Empirical test of CAPM
- Multi factor models of risk and return
Risk
- Definition of Risk
- Process of risk management
- Different kinds of risk
- Measuring Risk
- Managing Risk
Equity Portfolio Management Strategies
- Passive management strategies
- Active management strategies
- Fundamental law of active management
- Active versus passive management
- Smart Beta management strategies
- Factor-based portfolios
- Momentum Investing
- Investment Management Styles
- Socially responsible investing/ethical investing
- Core and satellite investment management approach
- Concept of Alpha beta Separation
- Constructing Equity portfolios with derivative securities
- Protecting portfolios with Put options
- Global Active Strategy
Fixed Income Portfolio Management Strategies
- Fixed Income Instruments
- Passive management strategies
- Active Management Strategies
- Global Fixed Income Strategy
- Constructing bond portfolios with derivative securities
- Protecting portfolios with derivatives
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: Bench-marking 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
Portfolio Rebalancing
- Need for rebalancing
- Cost and difficulties of rebalancing
- Periodicity of rebalancing
- Buy and Hold Strategy
- Constant Mix Strategy
- Constant Proportion Portfolio Insurance
- Global Investment Performance Standard (GIPS)
