Scheme Related Information
Chapter 5 covers everything a distributor needs to know about mutual fund schemes — how they are launched, how loads work, and how systematic plans (SIP, SWP, STP) function. Expect 6–10 questions from this chapter in the exam.
Types of Mutual Fund Schemes
Schemes are classified by structure and investment objective.
| By Structure | Key Feature |
|---|---|
| Open-ended | Buy/sell on any business day at NAV. No fixed maturity. Most common type. |
| Close-ended | Fixed maturity period. Units available only during NFO. Listed on exchange after NFO. |
| Interval | Combines features of both. Allows transactions only during specified intervals. |
New Fund Offer (NFO)
An NFO is the first-time subscription offer for a new mutual fund scheme. Key facts:
- NFO units are offered at ₹10 per unit (face value)
- NFO period is typically 15–30 days
- AMC must allot units within 5 business days of NFO closure
- Refund of subscription money (if scheme does not open) within 5 business days
- Minimum subscription amount varies by scheme type
Load Structure
- Entry load — Abolished by SEBI in August 2009. No entry load is allowed on any mutual fund.
- Exit load — Charged on redemption within a specified period. Credited to the scheme (not the AMC).
- Exit load must be disclosed in the SID and KIM.
- SEBI caps exit load at 2% for most schemes.
Systematic Plans — SIP, SWP, STP
| Plan | Full Form | What It Does | Ideal For |
|---|---|---|---|
| SIP | Systematic Investment Plan | Invest a fixed amount at regular intervals | Salaried investors; rupee cost averaging |
| SWP | Systematic Withdrawal Plan | Withdraw a fixed amount at regular intervals | Retirees needing regular income |
| STP | Systematic Transfer Plan | Transfer fixed amount from one scheme to another (same AMC) | Moving lump sum from debt to equity gradually |
Sample Practice Questions
Frequently Asked Questions
What is covered in NISM V-A Chapter 5?
Chapter 5 covers NFO process, types of schemes (open-ended, close-ended, interval), load structure (entry and exit loads), and systematic plans — SIP, SWP, and STP.
What is the difference between SIP, SWP, and STP?
SIP — invest fixed amount regularly. SWP — withdraw fixed amount regularly. STP — transfer fixed amount from one scheme to another within the same AMC.
How many questions from Chapter 5 appear in the NISM V-A exam?
Chapter 5 typically contributes 6–10 questions. NFO pricing, load calculations, and SIP/SWP/STP distinctions are the most frequently tested topics.