Taxmann Portfolio Management Services Distributors by (NISM) An Educational Initiative of SEBI Edition September 2026

Portfolio Management Services (PMS) Distributors Edition September 2026

Portfolio Management Services (PMS) Distributors Edition September 2026

Description

Portfolio Management Services (PMS) Distributors is a complete, single-volume account of how portfolio management services work in India: what a PMS mandate is, who may offer one and on what conditions, what the client must be told before signing, and how the portfolio is then constructed, administered, priced, measured, reported and taxed. Published by Taxmann for the National Institute of Securities Markets, it is the official NISM workbook for the NISM-Series-XXI-A certification.

The book is written to a specific proposition: a PMS mandate is not a packaged product. There is no scheme information document, no daily published NAV and no single headline expense ratio. What the client receives is a bilateral agreement, governed by a disclosure document, priced according to a fee structure that someone must be able to explain, and judged by statistics that someone must be able to read. The treatment throughout is worked rather than asserted—fee calculations, return measures, bond valuations and risk statistics are each derived from a numerical example, and statutory positions are footnoted to the governing regulation or circular with its source URL.

This book is intended for the following audience:

• Distributors, Relationship Managers and Sales Staff at AMC-affiliated, brokerage-affiliated and boutique PMS houses
• Wealth Managers, Private Bankers, Family Office Executives and independent financial distributors
• Compliance, Operations, Dealing-Desk and Client-Servicing Staff of SEBI-registered portfolio managers
• Principal Officers and Fund-Management Decision-Makers at portfolio managers
• Registered Investment Advisers and Mutual Fund Distributors extending into managed portfolio solutions
• Chartered Accountants, Company Secretaries and Lawyers advising portfolio managers or PMS investors
• HNI and Family-Office Investors who want to understand what they are signing and being charged
• Candidates for the NISM-Series-XXI-A Certification Examination, and students entering the industry

The Present Publication is the September 2025 Workbook Version, developed and reviewed by Certification Team of NISM, jointly with Dr Rachana Baid, Dr Kameshwar Rao and Dr Kishore Rathi, drawing on other NISM certification workbooks and NISM Resource Persons, with the contribution of the Examination Committee for NISM-Series-XXI-A comprising industry experts. It is published exclusively by Taxmann, with the following noteworthy features:

• [Both Codes of Conduct in Full] The eighteen-clause Code of Conduct for PMS Distributors, and the thirteen-clause code for portfolio managers under Schedule III
• [Amended & Updated] Including the simplified Disclosure Document format notified on 9th September 2025, the MITC document and mandatory fee calculation tool, mandatory APMI registration for distributors, and the Online Dispute Resolution mechanism
• [Fees Worked Line By Line] Performance fee under a high water mark and hurdle rate computed across four years, including a minus 25 per cent year, showing exactly when a performance fee is and is not payable
• [Spreadsheet Method Taught Explicitly] Four MS Excel illustrations printing the full argument syntax for the PRICE, YIELD and DURATION functions
• [Built Around the Distribution Role] The disclosure document set out heading by heading, the client agreement point by point, the cost stack line by line, and the client’s reporting entitlement item by item, including the manager’s duty to disclose the commission paid to the distributor
• [A Usable Regulatory Reference] The Portfolio Managers Regulations 2020, PMLA obligations, Schedule C insider trading standards and PFUTP prohibitions each summarised in their own right
• [Self-Testing Throughout] Sample questions with indicated answers at the end of every chapter, and four extended caselets at the close

The coverage of the book is as follows:

• Chapter 1 – Investments
  • Investment against saving and speculation; time value of money; the components of required return; seven types of risk; equity, fixed income, commodities, real estate, structured products and distressed securities; and the comparison of mutual funds, AIFs and portfolio managers on regulation and minimum ticket size
• Chapter 2 – Introduction to Securities Markets
  • The statutory definition of securities; the primary market from IPO and FPO through QIP, preferential issue, OFS and depository receipts; the secondary market with clearing, settlement and margining; and the full cast of market participants
• Chapter 3 – Investing in Stocks
  • Equity risk and diversification; the economy-industry-company framework; Porter’s five forces and SWOT; the valuation toolkit from dividend discount and free cash flow models to P/E, P/B, EV/EBITDA, EVA and MVA; technical analysis; and corporate governance as a selection input
• Chapter 4 – Investing in Fixed Income Securities
  • Bond characteristics, covenants and embedded options; credit rating symbols for long-term and short-term instruments; the four yield measures—coupon, current, yield to maturity and yield to call—each with a worked Excel illustration; and interest rate risk, the price-yield propositions and duration
• Chapter 5 – Derivatives
  • Forwards, futures, options and swaps; market structure; hedging, speculation and arbitrage; commodity and currency contracts; margining and open interest; and the specific rules governing derivative use inside a PMS mandate
• Chapter 6 – Mutual Fund
  • Legal structure and working of a fund; classification by objective, structure, management and universe; NFO, ASBA and systematic transactions; the fact sheet; NAV, TER and unit pricing; and scheme performance measures
• Chapter 7 – Role of Portfolio Managers
  • Discretionary, non-discretionary and advisory services; organisational structure; registration through Form A, the Principal Officer’s qualification and experience conditions and the ₹5 crore net worth requirement; the fiduciary and segregation duties; and the six Do’s and thirteen Don’ts governing portfolio administration, custodian appointment, records and audit
• Chapter 8 – Operational Aspects of Portfolio Managers
  • Who may invest and the ₹50 lakh minimum; the two-part Disclosure Document; written allocation policies, dealing-team controls and audit trails; GIPS disclosure practice; KYC, FATCA and CRS on-boarding including NRI mechanics; the fifteen-point client agreement and the MITC document; direct on-boarding; liability, grievance redressal and ODR; and the full cost architecture—no upfront fees, brokerage at actuals, the 0.50 per cent expense cap, graded exit loads, high water mark and hurdle rate
• Chapter 9 – Portfolio Management Process
  • Asset allocation and correlation; the Investment Policy Statement in full, from objectives and constraints through goal sheets, financial position, psychographic and life-cycle analysis; the SEBI and APMI benchmarking framework; strategic versus tactical allocation; and rebalancing
• Chapter 10 – Performance Measurement and Evaluation
  • Holding period return, TWRR against MWRR, CAGR and alpha-beta decomposition; standard deviation, semi-variance, beta and tracking error; Sharpe, Treynor, Sortino, Information Ratio and M-squared; benchmarking and peer group analysis; Fama attribution; quarterly client reporting with TWRR and XIRR presentation; valuation norms; and GIPS
• Chapter 11 – Taxation
  • Residential status including deemed residence and Place of Effective Management; capital gains against business income and how each is characterised; and the taxation of capital gains, dividends, interest and business income, closing on the Section 9A safe harbour for offshore funds managed from India
• Chapter 12 – Regulatory, Governance and Ethical Aspects
  • The PMLA regime; the thirteen Schedule C insider trading standards; the PFUTP prohibitions; the Portfolio Managers Regulations, 2020, summarised across registration, investment restrictions, and associate-exposure limits; the Eligible Fund Manager framework; both codes of conduct; research objectivity and soft-dollar practices; and the Investor Charter
• Sample Case Study Questions
  • Four caselets of five questions each: fund ranking by risk-adjusted measures; index and active fund evaluation on alpha and tracking error; portfolio construction under dominance and correlation; and CAPM-based expected return against realised return

Each of the twelve chapters follows an identical internal template, ensuring uniformity of presentation throughout the volume.

• Chapter Opening — Every chapter commences with a boxed Learning Objectives panel, stating in bulleted form the outcomes the reader is expected to attain upon completion of the chapter
• Body of the Chapter — The text proceeds through numbered sections and sub-sections, each introduced by a shaded heading band
• Display Material — Discrete concepts are presented apart from the running text in seven numbered Boxes; quantitative material in nine numbered Tables; graphics and analytical frameworks in ten numbered Exhibits; and spreadsheet workings in four numbered Illustrations. All four series are numbered by chapter
• Footnotes — Statutory positions are supported by numbered footnotes at the foot of the page, numbered continuously across the volume. Each cites the governing regulation, schedule, circular, master circular, FAQ or CBDT guideline, together with its source URL
• Chapter Conclusion — Each chapter concludes with a boxed set of sample multiple-choice questions, between two and six in number, with the correct option indicated in bold. The volume closes with a separate section comprising four extended case studies, each carrying five questions with answers indicated and, where the computation is not self-evident, a footnoted explanation setting out the working
• Page Layout — Running heads carry the chapter title on every page, and folios are placed in the outer margin to assist navigation

About the Author

The National Institute of Securities Markets (NISM) is an educational institution established in 2006 by the Securities and Exchange Board of India (SEBI), the regulator of India’s securities markets. Its creation followed the Union Finance Minister’s 2005–06 Budget announcement, which called for an institution dedicated to teaching, training, and conducting research in the securities markets.