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

In the mutual fund structure in India, which entity holds the assets of the mutual fund scheme for the benefit of unit holders?

Scheme assets are held by the trustees for the benefit of unit holders, with a custodian keeping the securities in safekeeping. The AMC merely manages the money and the sponsor only sets up the trust, so neither of them holds the assets.

  1. AThe Asset Management Company
  2. BThe Trustee, through the Custodian appointed for safekeepingCorrect
  3. CThe Registrar and Transfer Agent
  4. DThe Sponsor of the mutual fund

Explanation

The trust owns the scheme assets and the trustees hold them for the benefit of unit holders. The custodian physically keeps the securities on behalf of the trustees. The AMC only manages the investments and does not own the assets, and the sponsor is only the settlor of the trust.

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