NISM Series XXI-B: Portfolio Managers Exam Pattern

This introductory unit explains the broader investment environment and the various asset classes available to investors. Candidates must understand the relationship between risk, return, inflation, and investment objectives. Questions frequently test the role of financial markets and how different investment avenues contribute to wealth creation and portfolio diversification strategies.

This unit introduces the structure and functioning of securities markets in India. Candidates must understand the role of stock exchanges, intermediaries, regulators, and market participants. You will also be tested on the distinction between primary and secondary markets and the operational framework governing securities trading activities.

Equity investing forms a critical component of portfolio management. This unit covers equity shares, valuation concepts, shareholder rights, and factors influencing stock prices. Candidates must understand the risks and return potential associated with equities and the analytical methods used to evaluate companies and investment opportunities within capital markets.

This chapter focuses on debt instruments such as bonds, debentures, and government securities. Candidates must understand interest rate risk, credit risk, bond pricing, and yield concepts. Our Portfolio Management Mock Tests heavily emphasise fixed income characteristics and the role of debt securities in balancing portfolio stability and predictable returns.

Derivative instruments are widely used for hedging and portfolio risk management. This unit covers futures, options, forwards, and swaps along with their practical applications. Candidates must understand derivative pricing basics, margin requirements, settlement mechanisms, and the risks associated with leveraged financial instruments used in portfolio management strategies.

This unit introduces the structure, benefits, and operational framework of mutual funds. Candidates must understand various scheme categories, Net Asset Value (NAV), expense ratios, and systematic investment methods. Questions frequently test mutual fund suitability, diversification benefits, and the role of professionally managed investment products within client portfolios.

Portfolio managers play a crucial role in investment decision-making and wealth management. This unit explains the responsibilities, fiduciary duties, and client servicing obligations of portfolio managers. Candidates must understand discretionary and non-discretionary portfolio management services and the importance of aligning investment strategies with client objectives and risk appetite.

This chapter focuses on the operational framework governing portfolio management activities. Candidates must understand account opening procedures, documentation requirements, reporting obligations, fee structures, and operational controls. Our NISM PMS Practice Tests strongly focus on compliance workflows, client servicing processes, and operational responsibilities of portfolio management entities.

Portfolio management is a structured and continuous investment process. This unit covers investment policy formulation, asset allocation, security selection, diversification, execution, and portfolio review mechanisms. Candidates must understand how portfolio managers construct and manage portfolios according to investment objectives, time horizon, liquidity needs, and client-specific risk profiles.

Taxation significantly impacts portfolio returns and investment decisions. Candidates must understand the taxation of equity investments, debt instruments, capital gains, dividends, and portfolio transactions. Questions often test practical taxation concepts, holding period classifications, and the tax implications associated with different investment products and portfolio management strategies.

This is a critical compliance-oriented unit covering SEBI regulations, ethical standards, governance principles, and fiduciary responsibilities applicable to portfolio managers. Candidates must understand disclosure requirements, conflict management, investor protection measures, and professional conduct expectations. Our NISM Portfolio Management Model Tests heavily emphasise regulatory and ethics-based scenario questions.

Market indices serve as important benchmarks for measuring portfolio performance and market movements. This unit explains index construction methodologies, index types, and benchmark selection concepts. Candidates must understand how indices are used for passive investing, portfolio comparison, and evaluating investment performance across different market segments.

This unit introduces the Efficient Market Hypothesis (EMH) and the relationship between information availability and security prices. Candidates must understand weak-form, semi-strong form, and strong-form market efficiency concepts. Questions frequently test the implications of informational efficiency on active portfolio management and investment decision-making processes.

Investor psychology often influences investment decisions and market behaviour. This chapter explains behavioural biases such as overconfidence, anchoring, herd mentality, and loss aversion. Candidates must understand how emotional and cognitive biases affect portfolio decisions and how portfolio managers address irrational investor behaviour during market volatility.

Modern Portfolio Theory forms the foundation of scientific portfolio construction and diversification principles. Candidates must understand risk-return optimisation, correlation, diversification benefits, and efficient frontier concepts. Our NISM PMS Mock Tests frequently include conceptual and numerical questions based on portfolio optimisation and asset allocation techniques.

This unit focuses on capital market theories used in investment analysis and portfolio management. Candidates must understand concepts such as the Capital Asset Pricing Model (CAPM), systematic risk, beta, and expected returns. Questions frequently test the relationship between market risk and portfolio performance measurement methodologies.

Risk management is a core component of portfolio management. This unit covers market risk, credit risk, liquidity risk, inflation risk, and interest rate risk along with quantitative risk measurement techniques. Candidates must understand how portfolio managers identify, measure, monitor, and mitigate risks while maintaining alignment with client investment objectives.

This is one of the highest-weightage units in the syllabus and focuses on equity portfolio construction and management techniques. Candidates must understand active and passive investment strategies, growth versus value investing, sector allocation, and stock selection methodologies. Our NISM PMS Practice Tests extensively cover practical portfolio strategy and equity allocation scenarios.

Fixed income portfolio strategies are critical for managing interest rate and credit risks effectively. This unit covers duration management, immunisation strategies, yield curve analysis, and bond portfolio construction techniques. Candidates must understand how debt portfolios are structured to achieve stability, income generation, and risk-adjusted investment performance objectives.

This chapter evaluates the methods used to measure and analyse portfolio performance. Candidates must understand risk-adjusted return metrics, benchmarking techniques, alpha generation, Sharpe Ratio, and portfolio attribution analysis. Questions frequently test the ability to evaluate portfolio managers based on consistency, efficiency, and achievement of investment objectives.

Portfolio rebalancing ensures that investment allocations remain aligned with predefined financial objectives and risk tolerance levels. This unit covers rebalancing methods, triggers, transaction considerations, and practical implementation strategies. Candidates must understand the importance of periodic portfolio adjustments in maintaining diversification, managing risk exposure, and optimising long-term portfolio performance.