The book discusses the fundamentals of investments and securities markets, providing a detailed analysis of stock investments, fixed-income securities, derivatives, and mutual funds. It intricately explains portfolio managers’ role and operational aspects, including the portfolio management process, performance measurement, and evaluation criteria. Much of the book is dedicated to the critical elements of taxation, regulatory frameworks, governance, and ethical considerations in portfolio management, offering a holistic view of portfolio managers’ responsibilities and challenges.

This book is tailored to equip PMS distributors with essential knowledge and skills, aligning to establish a common minimum knowledge benchmark for them.

The Present Publication is the October 2023 workbook version, published exclusively by Taxmann for NISM Certification Examination XXI-A [Portfolio Management Services (PMS) Distributors], with the following noteworthy features:

• [Know the Basics] of investments, securities markets, investing in stocks, understanding fixed income securities, derivatives and mutual funds
• [Understand] the role of portfolio managers; operational aspects of portfolio management services and the portfolio management process; performance measurement and evaluation of portfolio managers
• [Get Oriented] to the taxation aspects and regulatory, governance and ethical aspects of portfolio managers

The detailed contents of the book are as follows:

• Investments – This chapter discusses investments, differentiating them from speculation, and discusses investment objectives, types, and channels
• Introduction to Securities Markets – It introduces securities markets, explaining the primary and secondary markets and the roles of various market participants
• Investing in Stocks – This section covers equity investments, risk diversification, equity market overview, equity research, stock selection, and technical analysis
• Investing in Fixed Income Securities – Discusses fixed income securities, bond characteristics, safety determinants, bond valuation, and price volatility
• Derivatives – Defines derivatives, types of derivative products, market structures, purposes, and investment strategies in PMS
• Mutual Funds – Explores the concept and role of mutual funds, their legal structure in India, types of mutual fund products, and investment processes
• Role of Portfolio Managers – Provides an overview of portfolio managers in India, types of PMS, organizational structures, and general responsibilities
• Operational Aspects of Portfolio Managers – Details on investor onboarding, disclosures, investor grievance redressal, regulatory disclosures, and investment costs
• Portfolio Management Process – Discusses asset allocation decisions, correlation across asset classes, steps in portfolio management, and portfolio rebalancing
• Performance Measurement and Evaluation of Portfolio Managers – Covers performance parameters, risk and return measures, risk-adjusted return, performance evaluation methods, and portfolio manager selection
• Taxation – Focuses on the taxation of investors, taxation of various income streams, and specific tax regulations
• Regulatory, Governance and Ethical Aspects – Addresses money laundering prevention, insider trading regulations, fraudulent and unfair trade practices, portfolio manager regulations, best practices, and investor charter

NISM is a leading provider of high-end professional education, certifications, training and research in financial markets. NISM Certification programs aim to enhance the quality and standards of professionals employees in various segments of financial services sector. NISM’s School of Certification of Intermediaries (SCI) develops and conducts certification examinations and Continuous Professional Education (CPE) programs that aim to ensure that professional meet the defined minimum common knowledge benchmark for various critical market functions like:

• Mutual Funds
• Equities
• Derivatives
• Securities Operations
• Compliance
• Research Analysis
• Investment Advice

These Certifications and CPE Programs are being developed and administered by NISM as mandated under ‘Securities and Exchange Board of India (Certification of Associated Persons in the Securities Market) Regulations, 2007’. The Certifications creates quality market professionals and catalyzes greater investor participating in the markets. Certifications also provides structured career paths to students and job aspirants in the securities market.