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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Concept and Role of a Mutual Fund

In the Indian mutual fund structure, which entity holds the assets of the mutual fund scheme on behalf of the unit holders, and which entity must be independent of the sponsor in the sense of being a separate registered custodial body for safekeeping of securities?

The trustees hold the scheme's property in trust for the benefit of unit holders, while a SEBI-registered custodian safekeeps the securities. The AMC only manages the investments as the trust's investment manager. The registrar handles unit records and transactions, not custody.

  1. AThe trustee holds the property in trust for unit holders, and the custodian safekeeps securitiesCorrect
  2. BThe AMC holds the property in trust, and the registrar safekeeps securities
  3. CThe sponsor holds the property directly, and the trustee safekeeps securities
  4. DThe unit holders collectively hold title, and the AMC safekeeps securities

Explanation

Mutual fund property is held by the trust through its trustees for the benefit of unit holders. The custodian, registered with SEBI, keeps physical or dematerialised securities in safe custody. The AMC manages investments but does not hold the trust property.

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