2. ABOUT THE EXAM
➢ Firstly you need to register for the exam in NISM Website nism.ac.in
➢ After your profile approved by NISM you can enroll for the exam by selecting test center and location
➢ Exam will be having 100 MCQ 2-hour duration. Pass mark 50 and no negative marks
➢ This PPT is only for giving an overall idea about the subject.
➢ Please go through the NISM PDF VA Mutual Fund Distributor Exam which is the bible for the exam.
➢ Finally go through the practice questions given at the end of this PPT and also those which will be
sent regularly by the session progresses.
➢ You can also refer to the videos and mock tests available in sites such as modelexam.in
➢ Wish you a brilliant success in NISM Mutual Fund Distributor Exam. All the best..let us start…
3. INTRODUCTIONTO INVESTMENTS
Can you tell how investment differs from Savings?
How to evaluate Investments:
➢ Safety
➢ Liquidity
➢ Returns
➢ Convenience
➢ Ticket Size
➢ Taxability of income
➢ Tax Deduction
Different Asset Classes—Real Estate, Commodities, Debt & Equity, etc
4. RISK IN INVESTMENTS
Different Risks in Investments—
1. Inflation risk,
2. Liquidity Risk,
3. Credit Risk,
4. Market Risk,
5. Interest Rate Risk
6. Location basis risk
Behavioural Biases in Investment Decision Making
Availability Heuristic,
Confirmation Bias,
Familiarity Bias,
Herd Mentality, Loss Aversion, Overconfidence & Recency bias
5. RISK IN INVESTMENTS
➢ Risk Profiling of Investors:
➢ Need/Risk taking Ability/ Willingness
➢ Asset Allocation:
➢ Strategic Asset Allocation
➢ Tactical Asset Allocation
➢ Reallocation
➢ Why Mutual Fund Investment over direct investment?
Professional Management
6. WHAT IS MUTUAL FUND?
➢A pool of Money, collected from investors, invested according to certain investment
objectives.
➢Ownership in the hands of investors who have pooled in the funds.
➢Managed by a team of investment professionals.
➢The Pool of funds invested in portfolio of marketable investments.
➢Investors share denominated by “Units” that have a Net Asset Value(NAV) which changes
everyday.
➢The portfolio is created as per the stated objectives.
➢Investors make money through Capital Appreciation and Income Distribution.
8. AMFI
ASSOCIATION OF MUTUAL FUNDS OF INDIA
Dedicated to developing the Indian Mutual Fund industry on professional,
healthy and ethical lines and to enhance and maintain standards in all
areas with a view to protecting and promoting the interests of mutual funds
and their unit holders.
➢ The AMFI Code of Ethics,“The ACE” for short, sets out the
standards of good practices to be followed by the Asset Management
Companies in their operations and in their dealings with investors,
intermediaries and the public.
➢ AGNI – AMFI Guidelines and Norms for Intermediaries – Defines
the guidelines and norms for intermediaries like AMCs, Investor etc.
9. WHAT IS NFO & IPO?
➢ When a scheme is first made available for investment, it is called a ‘New
Fund Offer’ (NFO).
➢ During the NFO, investors get the chance of buying the units at their face
value. Post-NFO, when they buy into a scheme, they need to pay a price
that is linked to its NAV.(Net AssetValue)
➢ When a company issues shares to the public for first time it is called as
IPO.
10. NAV & AUM
➢Net Assets of a scheme (Net Asset Value) is that figure which is arrived at
after deducting all scheme liabilities from its asset. NAV is calculated by
dividing the value of Net Assets by the outstanding number of Units. NAV is
an indicator of performance of the fund.
➢AUM is the Total Assets under management. Ie NAV multiplied
by number of units. AUM is an indicator of the customer
confidence on the fund.
➢NAV=AUM/ No of Units=(Total value of all investments-
Expenses)/ number of units
➢AUM is calculated on MTM valuation of all investments
11. NUMERICALS
1) A fund has collected total amount of Rs 500 Crore during NFO. Present value of all
investments is 780 Crores.Accumulated expenditure of Rs 15 crores and Dividend
receivable of Rs 35 Crores.What is the NAV?
2) A fund has collected Rs 1000 crores during NFO. Rs 600 Crore invested in equities value
of which now is Rs 1500 crores. Rs 200 Crore invested in debt value of which now is 300
Crores. Rs 150 Crore invested in gold etf which is now valued at Rs 240 crores. If the
allowable expenditure is Rs 40 crores find out NAV?
12. ADVANTAGES OF MUTUAL FUND INVESTMENTS
➢Professional Management
➢Portfolio Diversification
➢Economies of scale
➢Liquidity
➢Tax Deferral
➢Tax Benefits
➢Convenience and Flexibility
➢Investment Comfort
➢Regulatory Comfort
➢Systematic Approach to Investments
13. LIMITATIONS OF MUTUAL FUNDS
➢ Lack of portfolio customization
➢ Choice of Overload
➢ No control over cost
➢ No guaranteed returns