NISM Series XIX-C Syllabus: Alternative Investment Fund Managers
All 17 chapters of the Alternative Investment Fund Managers workbook, and what each one covers.
NISM Series XIX-C is the certification examination for managers of Alternative Investment Funds (AIFs) and their key investment team. Its curriculum has 17 chapters plus a glossary. Chapters I to V are investment theory, VI to XV the AIF business from structuring to winding up, and XVI and XVII tax and regulation.
NISM does not publish a weightage for any XIX-C chapter; any site showing one has made it up. The table below follows NISM's own chapter list and sub-topics.
All 17 chapters at a glance
Chapter titles and sub-topics as NISM's curriculum lists them.
| Chapter | What it covers |
|---|---|
| I. Investments Landscape | Investment versus speculation, investment objectives, estimating the required rate of return |
| II. Types of Investments | Traditional versus alternative investments, types of each, channels for investing, the role of alternatives in portfolio management, how alternatives grew |
| III. Concept of Informational Efficiency | Informational versus operational efficiency, random walk theory, tests of the efficient market hypothesis, market anomalies |
| IV. Introduction to Modern Portfolio Theory | Risk averse, risk seeking and risk neutral investors, expected return and variance of a security and a portfolio, efficient frontier, portfolio optimisation |
| V. Introduction to Capital Market Theory | Capital market line, market portfolio, market and non-market risk, CAPM, security market line, empirical tests of CAPM, multi-factor models |
| VI. Alternative Investment Funds in India and its Suitability | Growth of AIFs in India, the three categories compared, suitability to investors, AIFs in diversification and risk management |
| VII. Alternative Investment Fund Ecosystem | Concepts prevalent in the AIF industry |
| VIII. Alternative Investment Fund Structuring | The principle of pooling, buy-out transactions, anatomy of an AIF constitution, common fund structures and a comparison between them |
| IX. Fee Structure and Fund Performance | Management fees and expenses, hurdle rate, high-water mark, risk and return measures, pre- and post-tax returns, risk-adjusted performance measures with a worked case |
| X. Indices and Benchmarking | What an index is and what it is used for, index methodologies, stock, bond and composite indices, performance benchmarking |
| XI. Investment Strategies, Investment Process and Governance of Funds | Strategies of Category I and II versus Category III AIFs, deal sourcing, investor protection rights, conflict of interest, co-investments, the code of conduct for managers and investment committees |
| XII. Fund Due Diligence (Investor Perspective) | How an investor checks a fund and its manager, manager selection, the key man clause, due diligence on legal documents |
| XIII. Legal Documentation and Negotiations | Trust deed, LLP deed or memorandum and articles, investment management agreement, subscription agreement, private placement memorandum, wrapper, the AIF investor charter |
| XIV. Valuation | Fixed income, equity and business valuation, asset-based, DCF and multiples approaches, valuation of investee companies, fund NAV including a Category III AIF, valuation regulations, third-party registered valuers |
| XV. Fund Monitoring, Reporting and Exit | Monitoring fund progress, fund reporting, exit options, secondaries, winding up, the liquidation scheme and the dissolution period |
| XVI. Taxation | Taxation of Category I and II AIFs versus Category III, surcharge, set-off and carry-forward of losses, GAAR, the Multilateral Instrument, other applicable taxes, worked examples |
| XVII. Regulatory Framework | SEBI (AIF) Regulations 2012 in detail, FEMA 1999, PMLA 2002, SEBI insider trading, PFUTP, ICDR and FPI regulations, FATCA and CRS |
Chapters I to V: investment theory
These five chapters are textbook finance. Chapter II draws the line between traditional and alternative investments that the paper relies on. Chapters III to V expect you to work the ideas, not just name them: market anomalies, portfolio expected return and variance, the efficient frontier and CAPM.
Chapters VI to XV: the AIF business
This is the core of the paper. Chapter VI sets out the three AIF categories and who each suits. Chapters VII and VIII cover the ecosystem and how a fund is pooled and structured. Chapter IX is the calculation chapter: management fee, hurdle rate, high-water mark, then risk-adjusted performance measures.
Chapter XI moves from strategy to governance, including the manager's code of conduct. Chapters XII and XIII look at the fund from the investor's side: due diligence, the key man clause and the legal documents. Chapter XIV is valuation, including NAV for a Category III fund. Chapter XV closes the fund's life: reporting, exits and winding up.
Free account, this exam preselected.
Chapters XVI and XVII: tax and regulation
Chapter XVI explains why Category I and II AIFs are taxed differently from Category III: the first two pass income through to investors, the third is taxed at the fund level. Surcharge, loss set-off and GAAR follow, with examples.
Chapter XVII walks through the SEBI (AIF) Regulations 2012 topic by topic: registration, sponsor and manager commitment, accredited investors, first and final close, tenure, investment conditions, code of conduct and reporting. It then adds FEMA, PMLA, the other SEBI regulations named in the table, and FATCA and CRS. SEBI amends the AIF Regulations often, so learn from the current text.
How XIX-C tests the syllabus
The paper has 90 MCQs of 1 mark and 6 case studies with 5 questions of 2 marks each, 150 marks in all, and 25% of a question's marks is deducted for a wrong answer: 0.25 on an MCQ and 0.5 on a case question. Chapters I to V and IX suit calculation questions; the case studies describe a fund, so the AIF chapters VI to XVII are their likely source. The common trap is answering from mutual fund or PMS rules. Leverage, tax and investment conditions differ by AIF category, and the case usually turns on which category the fund is.
FAQs
What is NISM XIX-C?expand_more
NISM Series XIX-C is the Alternative Investment Fund Managers Certification Examination. NISM describes it as a common minimum knowledge benchmark for AIF managers and their key investment team.
How many chapters are there in the NISM XIX-C syllabus?expand_more
17, from Investments Landscape (chapter I) to Regulatory Framework (chapter XVII), plus a glossary.
What is the chapter-wise weightage for NISM XIX-C?expand_more
NISM does not publish one. Plan around chapters VI to XVII, which carry the AIF-specific material.
What are Category I, II and III AIFs?expand_more
Chapter VI covers this. Under the SEBI AIF Regulations, Category I funds invest in areas the regulator sees as desirable, such as start-ups, SMEs and infrastructure. Category II funds fit neither of the other two and do not borrow beyond day-to-day needs, such as most private equity and debt funds. Category III funds use complex trading strategies and may use leverage, such as hedge funds.
Who is the investment manager of an AIF?expand_more
The person or entity the fund appoints to manage its investments. Chapters XI and XVII cover the manager's duties, code of conduct and commitment to the fund.
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