NISM Series-V-B: Mutual Fund Foundation Practice Exam
The NISM Series-V-B: Mutual Fund Foundation exam aims to establish a standardized level of fundamental knowledge for a new category of mutual fund distributors, in accordance with SEBI circular CIR/IMD/DF/21/2012 dated September 13, 2012. This category includes individuals engaged in the sale and distribution of straightforward and high-performing mutual fund schemes, such as:
- Postal agents
- Retired government and semi-government officials (grade III and above or equivalent) with a minimum service tenure of 10 years
- Retired educators with a minimum service tenure of 10 years
- Retired bank officers with a minimum service tenure of 10 years, and other similar individuals (such as Bank correspondents) as may be notified by AMFI/AMC periodically.
The certification aims to elevate the standards of sales, distribution, and associated support services within the mutual fund industry.
Who should take the exam?
The NISM Series-V-B: Mutual Fund Foundation exam targets a specific group of individuals who want to sell and distribute simple and performing mutual fund schemes. This includes:
- Retired professionals
- Postal agents
- Others designated by AMFI/AMC
Exam Objectives
Upon successful completion of the Mutual Fund Foundation examination, candidates should:
- Understand the fundamentals of mutual funds, including their roles, structures, various types of schemes, and their characteristics.
- Understand how mutual funds are distributed in the market, how specific schemes are assessed, and how suitable schemes can be recommended to potential investors by this group of distributors.
- Understand the regulations and guidelines pertaining to the distribution of specific products.
- Grasp the basics of financial planning as an approach to investing in mutual funds.
Exam Details
- Exam Name: NISM Series-V-B: Mutual Fund Foundation
- Exam Languages: English
- Exam Questions: 50 Questions
- Time: 120 minutes
- Passing Score: 50
Course Outline
The Exam covers the given topics -
Topic 1: Concept and Role of a Mutual Fund
- Know the concept of securities markets and its role in the Indian Economy
- Understand the concept of mutual fund and compare and contrast with conventional investment avenues such as Bank Deposits, Post Office Deposits, Public Provident Fund.
- Understand the mutual fund industry and related concepts
- List the advantages and limitations of a mutual fund
- Understand the two plans or routes for investors to invest in a mutual fund
- Know about the different kind of investment options available to the investors
- Explain the role of new cadre of mutual fund distributors
Topic 2: Fund Structure and Constituents
- Know the basic legal structure of mutual funds in India and understand their role
- Understand the role and support functions of service providers of mutual funds
- Understand the organisation structure of Asset Management Company
Topic 3: Mutual Fund Products
- Understand the classification of mutual fund schemes
- Explain the categorisation and definition of open-end mutual fund schemes
Topic 4: Performance of Mutual Funds
- Understand the classification of mutual fund schemes
- Understand the concepts of Entry Load and Exit Load and their application in calculating the Net Asset Value (NAV)
- Understand the calculation of returns for an investor investing in mutual fund schemes
- Understand the concept of risk in a mutual fund investment
- Understand the measures of risk adjusted return
- Understand the concept of benchmark for some of the mutual fund schemes
Topic 5: Mutual Funds Taxation
- Understand the different types of taxes associated with mutual fund schemes
- Select different schemes of mutual funds based on their tax implication
Topic 6: Offer Document
- Know the process of New Fund Offer (NFO)
- Understand the key components of an offer document
Topic 7: Fund Distribution and Sales Practices
- Know various distribution channels for mutual funds
- Know the pre-requisites to be fulfilled to become a distributor of a mutual fund
- Know the transaction charges and commission structure for mutual fund distributors
- Know the regulations, guidelines and code of conduct for selling mutual fund schemes
Topic 8: Investor Transactions
- Know the types of investors eligible to invest in mutual fund schemes
- Understand the compliance requirements for mutual fund investors
- Know the KYC process followed by distributors through KYC Registered Agency (KRA)
- List the types of investor transactions in mutual funds
- Understand the different transaction mediums for purchase and repurchase (sale) of mutual fund
- Know the cut-off timing for subscription and redemption of mutual fund schemes
- Understand the concept of dematerialisation and mutual fund transactions through stock exchanges
Topic 9: Investment Services
- Describe the mutual fund investment plans
- Understand the systematic transaction processes
- Describe the contents and periodicity of Statement of Account (SoA) and Consolidated Account Statement (CAS) to the investor
- Explain the process for nomination and pledge
- List investor services and facilities offered by AMCs
Topic 10: Asset Classes
- Understand the objective behind investing in different asset classes through mutual funds
Topic 11: Financial Planning Concepts
- Understand the basics of Financial Planning
- Relate financial planning to financial goals and the time horizon for their achievement
- Relate Financial Goals with Investment Requirements
Topic 12: Helping Investors with Financial Planning
- Understand the steps of financial planning
- Know various stages of Life Cycle and investment needs
- Know various stages of Wealth Cycle and investment needs
- Understand the importance of risk profiling
- Understand financial planning with the help of model portfolios
- Understand the important parameters for selecting mutual fund schemes
- Understand taxation and liquidity aspects while selecting growth and dividend option within a mutual fund scheme
- Identify the sources of data to track mutual fund performance
Topic 13: Legal and Regulatory Environment
- Know the role of SEBI in regulating mutual funds
- List the functions of AMFI
- Understand Investors rights and obligations