Question of 2 Nov 2026: NISM Series V-A

Chapter 7 · Net Asset Value, Total Expense Ratio and Pricing of UnitsHard

Which statement about charges on a segregated portfolio is correct?

AThe AMC charges full investment and advisory fees from day one
BNo advisory fee; other TER only pro-rata on recovery
CNo NAV is ever declared for a segregated portfolio
DIt is valued only once a year, at the financial year end

The AMC cannot charge management fees on a segregated portfolio. Other TER is charged pro-rata only on recovery, and its NAV is declared daily.

The concept: Segregated portfolios: NAV and charges

When a debt scheme creates a segregated portfolio after a credit event, the bad security moves to a separate portfolio with its own NAV. No investment and advisory (management) fee may be charged on it. Other expenses can be charged only in proportion to any recovery.

Worked example

A ₹20 crore bond defaults and is moved to a segregated portfolio. The AMC earns no management fee on it. If ₹8 crore is later recovered, the related costs are charged in proportion to that recovery.

Question of the day: NISM Series V-A

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