NISM-Series-V-C: Mutual Fund Distributors (Level 2) Certification Examination

Test Objectives

Unit 1: Mutual Fund structures

1.1 Know the structure and working of funds such as:

       Fund of funds

       Exchange Traded Funds

       Real Estate Mutual Funds

       Venture Capital Funds

       Private Equity Funds

       International funds

Unit 2: Legal and Regulatory Environment of Mutual Funds

2.1 Understand the investment norms for mutual funds

2.2 Know the regulatory framework for Real estate mutual funds

2.3 Understand SEBI norms for mutual funds’ investment in derivatives

2.4 Understand SEBI norms with respect to change in controlling interest of an AMC

2.5 Understand the process for making changes to the mutual fund’s fundamental attributes,
      consolidation of schemes, etc.

Unit 3: Fund Distribution and Sales Practices

3.1 Understand the working of newer channels of MF distribution such as internet and stock

Unit 4: Investment and Risk Management

4.1 Differentiate between Fundamental Analysis and Technical Analysis and understand how
      these are applied in investment management

4.2 Detail the basics of Quantitative Analysis in investment decision making

4.3 Understand key concepts pertaining to the management of debt investments

4.4 Understand and analyse the basics of managing exposure to markets through Derivatives
      such as:

       Forwards

       Futures

       Options

       Swaps

4.5 Understand how derivatives can be used for the purpose of portfolio rebalancing and
      replicating an index

Unit 5: Valuation of Schemes

5.1 Understand and analyse how investments are valued in schemes, especially:

       Equities

      o Regular

      o Illiquid

       Debt

      o Regular

       Mark-to-market valuation

       YTM based accounting

      o NPA Provisioning etc.

       Gold

       Real Estate

Unit 6: Accounting

6.1 Understand how the net asset value (NAV) of a scheme is calculated and the various
      accounting requirements that have a bearing on NAV

6.2 Discusses how unit-holder’s transactions are accounted in the scheme

6.3 Explain the impact of corporate actions in companies where the scheme has invested

6.4 Know the concept of distributable reserves

6.5 Know the unique aspects of accounting related to real estate mutual fund schemes

Unit 7: Taxation

7.1 Analyse the impact of various tax provisions, on mutual funds and investors in mutual fund
      schemes, such as:

 Dividend Distribution Tax

 Taxability of dividends and capital gains

 Securities Transactions Tax

 Setting off gains and losses and carry forward of losses under Income Tax Act

 Dividend stripping and Bonus stripping

Unit 8: Investor Services

8.1 Describe the processes underlying investment in new fund offers, open end funds, closed
      end funds and ETFs

8.2 Briefly outline the concepts of nomination and pledge

Unit 9: Scheme Evaluation

9.1 Calculate Return on investment

       Simple, annualized, compounded returns, CAGR and XIRR (Using MS Excel Functions)

       Applicability of different returns to evaluate different types of funds

9.2 Understand Risk in Fund Investing and give suitable advice to investor

       Standard Deviation and Beta (Including MS Excel Functions)

9.3 Understand Benchmarks and their role in scheme evaluation

       Benchmarking performance

       Market benchmarks to evaluate equity fund performance

       Market benchmarks to evaluate debt fund performance

9.4 Analyse the fund managers’ performance using: (Including MS Excel Functions)

       Sharpe Ratio

       Sortino Ratio

       Treynor Ratio

       Jensen’s Alpha

       Appraisal Ratio

       Eugene Fama

       M2

9.5 Understand the limitations of quantitative evaluation

Unit 10: Asset Classes and Alternate Investment Products

10.1 Know historical perspective on Returns and Risk in Equity, Debt and Gold

10.2 Discuss a few alternative investment products available to the investors such as:

        Capital protection oriented schemes

        Structured products and equity linked debentures

10.3 Know basic details about portfolio management services and hedge funds

Unit 11: Cases in Financial Planning

11.1 Discuss practical aspects of financial planning including:

        Risk profiling

        Cash flow planning

        Asset Allocation

        Suggesting investment products and mutual fund schemes to investors

        Helping investors build their portfolio

Unit 12: Ethics and Investor Protection

12.1 Discuss various forms of mis-selling of mutual funds and Systemic safeguards for their

        Define mis-selling

        Highlight the safeguards provided by the structure of mutual funds

        Steps taken by AMFI / SEBI to prevent mis-selling

12.2 Understand the role of mutual funds in protection against frauds and scams

        Highlight the safeguards provided by the structure of mutual funds

        Steps taken by AMFI / SEBI to prevent frauds

       o Bank mandates

       o Third party redemptions

       o KYC

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