PMS Distributors
Portfolio Management Services distributor exam — discretionary & non-discretionary PMS, fees, and SEBI PMS regulations.
Exam Pattern & Marking
Detailed Syllabus
13 chapters · 115 total marks
| # | Chapter | Marks | Practice Qs |
|---|---|---|---|
| 1 | PMS Case Studies | 15 | 75 |
| 2 | PMS Portfolio Management Process | 15 | 75 |
| 3 | PMS Operational Aspects | 13 | 65 |
| 4 | PMS Equity Investing | 10 | 50 |
| 5 | PMS Performance Measurement | 10 | 50 |
| 6 | PMS Regulatory and Governance | 10 | 50 |
| 7 | PMS Role of Portfolio Managers | 10 | 50 |
| 8 | PMS Investments Foundation | 7 | 35 |
| 9 | PMS Collective Investment Vehicles | 5 | 25 |
| 10 | PMS Derivatives | 5 | 25 |
| 11 | PMS Fixed Income Investing | 5 | 25 |
| 12 | PMS Securities Markets Introduction | 5 | 25 |
| 13 | PMS Taxation | 5 | 25 |
| Total | 115 | 575 |
Marks per chapter reflect the official NISM syllabus weightage. Practice question counts show the bank size in our app — use them to gauge depth of preparation needed per chapter.
Key Knowledge Areas
Overview
Series XXI-A is for distributors selling Portfolio Management Services. SEBI requires PMS distributors to clear XXI-A before onboarding clients. The lighter sibling to XXI-B (which is for actual portfolio managers).
At a glance: 100 questions · 2 hours · 60% pass mark · 0.25 negative marking · ₹1,500 + GST.
Who should take XXI-A
- Wealth managers / RMs at private banks selling PMS
- IFAs onboarding HNI clients to PMS
- Sales staff at PMS firms
- Anyone offering PMS-distribution services to clients
Key Knowledge Areas
PMS structure
PMS is a discretionary or non-discretionary investment service for HNIs (≥₹50 lakh minimum investment) where each client holds securities in their own demat account. Unlike MF, there’s no pooling.
| Type | Decision-making | Common with |
|---|---|---|
| Discretionary | Manager decides, client signs PoA | Most retail PMS |
| Non-discretionary | Client decides on each trade | Some institutional clients |
| Advisory | Manager only advises | Niche segment |
Investment strategies
PMS strategies vary widely:
- Large-cap focused
- Multi-cap value
- Small/mid-cap growth
- Sector-specific (consumption, financials, IT)
- Quantitative / factor-based
SEBI (PMS) Regulations 2020
- Min investment: ₹50 lakh per client (raised from ₹25 lakh)
- Distributor commission: Capped, paid by manager (not client)
- Direct route: Clients can invest direct without distributor — lower fees
- Reporting: Monthly statements to clients, quarterly to SEBI
Key Fact: A PMS distributor cannot operate without an approved distribution agreement with the manager. Direct selling of PMS without empanelment is a SEBI violation.
Fee structures
- Fixed fee: Up to 2.5% of AUM
- Performance-linked: Hurdle rate + high-water mark + percentage above (typical: 12% hurdle, 20% performance fee, with HWM)
- Hybrid: Both fixed and performance components
Risk & return for PMS clients
- Higher volatility than MF (concentrated portfolios)
- Pass-through tax (each gain/loss on client’s ITR)
- Lock-in via subscription period or exit load
- Liquidity — typically T+5 to T+10 redemption
Exam Tips
Tip 1: PMS Regulations 2020 specifics (₹50 lakh min, fee structures, HWM/hurdle) are guaranteed.
Tip 2: Distinguish PMS from MF and AIF — pooling, demat ownership, taxation, minimum investment.
Tip 3: Know the difference between discretionary and non-discretionary PMS — and what PoA the client signs.
Tip 4: Performance fee math (HWM + hurdle + catch-up) is exam-favourite. Practise the cascade.
Try the Free Quiz
Test your knowledge with our free XXI-A practice quiz — or get the full bank of 575+ XXI-A questions plus mock tests in the NISM Exam Prep app.
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