Curriculum-NISM-Series-XXI-B: Portfolio Managers Certification Examination

I: Investment Landscape
A. Define Investment
B. Investment versus Speculation
C. Know the objectives of Investments
D. Estimating the required rate of return
E. Types of Investments
F. Channels for making investments

II: Introduction to Securities Markets
A. Define Securities Markets
B. Primary and secondary securities markets
C. Market participants and their activities

III: Investing in Stocks
A. Equity as an investment
B. Diversification of risk through equity instruments
C. Risks of equity investments
D. Overview of Equity Market
E. Equity research and stock selection
F. Technical Analysis
G. Understanding corporate governance

IV: Investing in Fixed Income Securities
A. Overview of Fixed Income Securities
B. Bond Characteristics
C. Determinants of bond safety
D. Analysis and Valuation of Bonds
E. Measuring price volatility for bonds
F. Determining Duration

V: Derivatives
A. Definition of Derivatives
B. Types of derivative products
C. Structure of derivative markets
D. Purpose of Derivatives
E. Introduction to Commodity and Currency Futures and Options
F. Underlying concepts in derivatives

VI: Mutual Fund
A. Concept and Role of Mutual Fund
B. Benefits of investing through mutual funds
C. Legal Structure of Mutual Fund in India
D. Working of mutual funds
E. Types of Mutual fund products
F. Processes of investing in mutual funds
G. Legal and Regulatory Framework – Key SEBI Regulation
H. Fact Sheet – Scheme Related Information
I. Net Asset Value, Total Expense Ratio, Pricing of Units
J. Mutual Fund Scheme Performance
K. Key performance measures

VII: Role of Portfolio Managers
A. Overview of portfolio managers in India
B. Types of portfolio management services
C. Organizational Structure of PMS in India
D. Registration requirements of a Portfolio Manager
E. General Responsibilities of a Portfolio Manager
F. Administration of investor’s portfolio

VIII: Operational Aspects of Portfolio Managers
A. Entities which can invest in PMS
B. Disclosures to the prospective clients
C. Process of on boarding of clients
D. Direct On-boarding in PMS
E. Liability in case of Default
F. Redressal of Investors grievances
G. Disclosures to the regulator
H. Costs, expenses and fees of investing in PMS

IX: Portfolio Management Process
A. Importance of Asset allocation decision
B. Understanding correlation across asset classes and securities
C. Steps in Portfolio Management Process
D. Asset allocation decision
E. Strategic versus Tactical Asset Allocation
F. Re-balancing of Portfolio

X: Taxation
A. Taxation of investors
B. Taxation of various streams of income
C. Section 9-A of Income Tax

XI: Regulatory, Governance and Ethical Aspects of Portfolio Managers
A. Prevention of Money Laundering Act, 2002
B. SEBI (Prohibition of Insider Trading) Regulation 2015
C. SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003
D. Securities and Exchange Board of India (Portfolio Managers) Regulations, 2020
E. Best practices for portfolio Managers

XII: Introduction to Indices
A. Introduction to Index
B. Uses of Indices
C. Factors differentiating the indices
D. How indices are created – Index Methodologies
E. Stock market indices
F. Bond market indices
G. Stock-Bond (Composite) Indices
XIII: Concept of Informational Efficiency
A. Informational efficiency Vs Operational Efficiency
B. Efficient Capital markets and random walk theory
C. Tests and Results of Efficient Market Hypotheses
D. Market Anomalies
E. Implication of market efficiency on Valuation and Portfolio Management

XIV: Behavioral Finance
A. Behavioral finance vs standard finance
B. How individuals make decision?
C. Categorization of biases
D. Fusion investing
E. Behavioral finance and market anomalies

XV: Introduction to Modern Portfolio Theory
A. Framework for constructing portfolios – Modern Portfolio Theory
B. Assumptions of the theory
C. Risk averse investors, Risk Seeking Investors and Risk Neutral Investors
D. Expected rate of return for individual security
E. Variance of return for individual security
F. Expected rate of return for a portfolio
G. Variance of return for a portfolio
H. Graphical presentation of portfolio risk/return of two securities
I. Concept of Efficiency Frontier
J. Portfolio Optimization process
K. Estimation issues

XVI: Introduction to Capital Market Theory
A. Capital market theory
B. Assumptions of capital market theory and the implications of relaxing these assumptions
C. Capital market line
D. Diversification of risk and market portfolio
E. Types of risk – market and non-market risk
F. Capital asset pricing model, CAPM
G. Security market line
H. Concept of market portfolio
I. Empirical test of CAPM
J. Multi factor models of risk and return

XVII: Risk
A. Definition of Risk
B. Process of risk management
C. Different kinds of risk
D. Measuring Risk
E. Managing Risk

XVIII: Equity Portfolio Management Strategies
A. Passive management strategies
B. Active management strategies
C. Fundamental law of active management
D. Active versus passive management
E. Smart Beta management strategies
F. Factor-based portfolios
G. Momentum Investing
H. Investment Management Styles
I. Socially responsible investing/ethical investing
J. Core and satellite investment management approach
K. Concept of Alpha beta Separation
L. Constructing Equity portfolios with derivative securities
M. Protecting portfolios with Put options
N. Global Active Strategy

XIX: Fixed Income Portfolio Management Strategies
A. Fixed Income Instruments
B. Passive management strategies
C. Active Management Strategies
D. Global Fixed Income Strategy
E. Constructing bond portfolios with derivative securities
F. Protecting portfolios with derivatives

XX: Performance measurement and evaluation of Portfolio Managers
A. Parameters to define performance – risk and return
B. Rate of return measures
C. Risk measures
D. Risk adjusted return
E. Performance Evaluation: Bench-marking and peer group analysis
F. Performance attribution analysis
G. Performance reporting to the Investor
H. Due Diligence and Portfolio Manager selection
I. Global Investment Performance Standard (GIPS)
J. GIPS Advertisement Guidelines

XXI: Portfolio Rebalancing
A. Need for rebalancing
B. Cost and difficulties of rebalancing
C. Periodicity of rebalancing
D. Buy and Hold Strategy
E. Constant Mix Strategy
F. Constant Proportion Portfolio Insurance