The Mutual Fund Distributor Exam, known as the NISM-Series-V-A: Mutual Fund Distributors Certification Examination, is essential for anyone aiming to become a mutual fund distributor in India. Conducted by the National Institute of Securities Markets (NISM), NISM mutual fund exam ensures that candidates possess the minimum required knowledge to engage in mutual fund sales and distribution. Successfully passing this exam grants candidates an ARN (AMFI Registration Number), officially certifying them as mutual fund distributors.
Becoming a mutual fund distributor in India involves clearing the NISM Mutual Fund Distributor Exam. This certification is designed to establish a standardised knowledge base for individuals involved in the sales and distribution of mutual funds. The NISM mutual fund exam certification aims to enhance the quality of sales, distribution, and related support services in the mutual fund industry. It is a crucial step for anyone looking to enter this field, providing them with the credentials needed to operate professionally and effectively in helping people investing in mutual funds. In this article, we will discuss the mutual fund distributor exam.
Which exam to give to become a mutual fund distributor in India?
To become a mutual fund distributor in India, one must pass the NISM-Series-V-A: Mutual Fund Distributors Certification Examination. This exam is organised by the National Institute of Securities Markets (NISM). The NISM exam is designed to ensure that candidates possess the necessary knowledge and skills to engage in mutual fund sales and distribution. After successfully passing this exam, candidates receive an ARN (AMFI Registration Number), which allows them to legally operate as mutual fund distributors. The exam covers various aspects of mutual funds, including their structure, management, and regulatory environment, ensuring that certified individuals are well-equipped to provide high-quality sales and distribution services.
All about mutual fund distributor exam (NISM exam)
The NISM-Series-V-A: Mutual Fund Distributors Certification Examination, commonly known as the NISM Exam, is organised by the National Institute of Securities Markets. This exam is mandatory for anyone looking to become a mutual fund distributor in India. It aims to establish a common minimum knowledge standard for individuals involved in mutual fund sales and distribution. The exam is open to individual mutual fund distributors, employees of organisations engaged in sales and distribution of mutual funds, and employees of asset management companies involved in mutual fund sales.
The certification enhances the quality of sales, distribution, and related support services in the mutual fund industry, ensuring that all certified individuals have a solid understanding of mutual funds, their management, and regulatory requirements.
NISM exam eligibility
- Gain expertise in mutual fund sales and distribution.
- Acquire in-depth knowledge of:
- Mutual fund industry operations
- Wealth management firms
- Eligibility criteria:
- Minimum age of 18
- Individuals engaged in distribution, brokerage, or mutual fund firms
- Students or professionals seeking a career in the stock market
- No specific educational qualifications required
By successfully completing the NISM Mutual Fund Distributor exam, you'll demonstrate your competence in the field and enhance your career prospects within the financial services industry.
Mode to appear in the NISM mutual fund distributor exam
The NISM Mutual Fund Distributor Exam can be taken in two languages: Hindi and English. For Hindi, the exam is conducted offline, while for English, candidates have the option to take the exam either online or offline. This flexibility allows candidates to choose the mode and language they are most comfortable with, making the exam process more accessible and convenient.
How much NISM exam fee to be submitted?
To register for the NISM Mutual Fund Distributor Exam, candidates must pay a fee of Rs. 1,500. The payment can be made online using a credit card, debit card, or net banking. This fee covers the cost of the exam and ensures that candidates are officially registered to take the test, allowing them to proceed with their certification process.
What is the validity for a NISM certificate?
The NISM Certificate for mutual fund distributors is valid for three years. After this period, certified individuals must renew their certification to continue operating as mutual fund distributors. This ensures that distributors stay updated with the latest regulations, industry practices, and market trends, maintaining high standards of knowledge and service in the mutual fund industry.
NISM exam pattern
The NISM Mutual Fund Distributor Exam consists of 100 questions, each worth one mark, for a total of 100 marks. To pass the exam, candidates must score at least 50%. There is no negative marking, allowing candidates to answer all questions without the risk of losing marks for incorrect answers. This straightforward exam pattern makes it easier for candidates to focus on demonstrating their knowledge.
How to enrol for the NISM exam?
Enrolling for the NISM mutual fund exam involves a few simple steps:
- Visit the NISM website: Go to the official NISM website.
- Create an account: Register by providing your details and creating an account.
- Select the exam: Choose the NISM-Series-V-A: Mutual Fund Distributors Certification Examination.
- Pay the fee: Pay the exam fee of Rs. 1,500 online.
- Schedule the exam: Select a suitable date, time, and mode (online/offline) for your exam.
These steps ensure a smooth and hassle-free enrollment process for candidates.
NISM exam syllabus
The NISM mutual fund exam syllabus encompasses a wide range of topics crucial for understanding the mutual fund industry. It includes investment concepts, mutual fund roles, legal structures, regulatory frameworks, scheme information, distribution practices, NAV and pricing, taxation, investor services, risk and performance analysis, and scheme selection. This comprehensive curriculum ensures that candidates are well-equipped with the necessary knowledge to excel as mutual fund distributors.
I. Investment landscape
- Understand parameters of the Indian economy
- Describe investors and their financial goals
- Understand savings and investment
- Discuss different asset classes
- Understand investment risk classifications
- Explain risk measure and management strategies
- Understand behavioural biases in investment decisions
- Understand risk profiling
- Explain asset allocation
- Compare do-it-yourself and professional help approaches
II. Concept & role of a mutual fund
- Explain the concept of mutual funds
- Understand mutual fund classifications
- Describe the growth of the mutual fund industry in India
III. Legal structure of mutual funds in India
- Describe the structure of mutual funds in India
- Understand key constituents of a mutual fund
- Understand the organisation structure of Asset Management Companies (AMC)
- Understand the role and support functions of mutual fund service providers
- Explain the role and function of the Association of Mutual Funds in India (AMFI)
IV. Legal and regulatory framework
- Describe the role of regulators in India
- Discuss the role of the Securities and Exchange Board of India (SEBI)
- Know the due diligence process followed by AMCs for mutual fund distributors
- Explain investor grievance and redressal standards (SCORES)
- Understand AMFI Code of Conduct for intermediaries
V. Scheme related information
- Understand mandatory documents, their purpose, and significance
- Explain non-mandatory disclosures
VI. Fund distribution and channel management practices
- Explain the role and importance of mutual fund distributors
- Understand the classification of mutual fund distributors
- Explain modes of distribution
- Understand prerequisites to become a mutual fund distributor
- Explain revenue for a mutual fund distributor
- Know SEBI's commission disclosure mandat
- Explain AMC due diligence for distributors
- Discuss nomination facilities and payment of commission to nominees
- Explain the change of distributor process
VII. Net asset value, total expense ratio, and pricing of units
- Discuss fair valuation principles
- Compute net assets of a investing in mutual funds scheme and NAV
- Explain dividends and distributable reserves
- Understand entry and exit loads and their impact on NAV
- Know key accounting and reporting requirements for mutual funds
- Understand NAV, total expense ratio, and pricing of units for segregated portfolios
VIII. Taxation
- Understand various taxes applicable to mutual funds
- Understand capital gains and capital gains tax (long-term and short-term)
- Understand dividend income and dividend income tax
- Differentiate between dividend distribution tax and capital gains tax
- Understand setting off gains and losses under the Income Tax Act
- Understand Securities Transaction Tax (STT)
- Know tax benefits under Section 80C for mutual fund investments
- Understand Tax Deducted at Source (TDS) in mutual funds
- Understand GST applicability in mutual funds
IX. Investor services
- Describe the New Fund Offer (NFO) process
- Explain NFO price and ongoing subscription price
- Discuss different investment plans and options
- Explain mutual fund unit allotment
- Describe the content and periodicity of investment statements
- Describe different types of mutual fund investors
- Explain how to fill mutual fund application forms
- Describe financial transactions with mutual funds (purchase, redemption, and switches)
- Explain cut-off time and time stamping
- Describe KYC requirements for mutual fund investors
- Explain different types of systematic transactions
- Explain operational aspects of systematic transactions
- Explain non-financial transactions in mutual funds
- Discuss status changes for special investor categories
- Explain investor transaction turnaround times
X. Risk, return, and performance of funds
- Understand general and specific risk factors
- Explain factors affecting mutual fund performance
- Describe drivers of returns and risk in mutual fund schemes
- Understand measures of returns
- Know SEBI norms for return representation by mutual funds
- Explain risks in fund investing
- Understand measures of risk
- Explain credit risk provisions
XI. Mutual fund scheme performance
- Explain the concept of benchmarks
- Compare Price Return Index and Total Return Index
- Choose appropriate performance benchmarks
- Evaluate equity fund performance using market benchmarks
- Evaluate debt fund performance using market benchmarks
- Evaluate other schemes using market benchmarks
- Explain quantitative measures of fund manager performance
- Define tracking error
- Understand sources for scheme performance disclosure (scheme documents, AMFI, AMC websites, fund fact sheets)
XII. Mutual fund scheme selection
- Explain scheme selection based on investor needs, preferences, and risk profile
- Explain risk levels in mutual fund schemes
- Explain scheme selection based on investment strategy
- Select mutual fund schemes offered by different AMCs or within scheme categories
- Know the dos and don’ts while selecting mutual fund schemes
Preparation tips for NISM mutual fund distributor examination
Preparing for the NISM Mutual Fund Distributor Examination:
- Study materials: Acquire NISM workbooks from reputable sources to ensure comprehensive coverage of the exam syllabus.
- Structured learning: Develop a structured study plan, incorporating regular practice sessions and review of previous year's question papers.
- Mock examinations: Utilise mock tests to assess your knowledge, identify areas for improvement, and familiarise yourself with the exam format.
- Exam preparation strategies:
- Reduce anxiety: Practice with NISM mock tests to alleviate exam-related stress and gain confidence in your preparation.
- Understand exam validity: Be aware that the mutual fund distributor certificate is valid for three years.
- Marking system: Note that the marking process is electronic and stringent, minimizing the potential for errors.
Conclusion
Understanding the NISM mutual fund exam syllabus is crucial for anyone aspiring to become a mutual fund distributor. The comprehensive coverage of topics ensures that candidates are well-prepared to meet industry standards and provide high-quality service. The Bajaj Finserv Platform, with over 1000+ mutual fund schemes listed, offers an excellent opportunity for certified distributors to leverage their knowledge and help investors achieve their financial goals providing them with a mutual fund calculator and the option to compare mutual funds. The platform's extensive resources and support make it an ideal choice for both new and experienced mutual fund distributors.
