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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Legal Structure of Mutual Funds in India

In the three-tier structure of a mutual fund in India, which entity holds the trust property for the benefit of the unitholders?

The Trustee Company or Board of Trustees holds the mutual fund's property in trust for the benefit of unitholders. The sponsor settles the trust, the AMC manages investments, and the custodian only safekeeps the securities, so none of them holds the trust property.

  1. AThe Asset Management Company
  2. BThe Trustee Company or Board of TrusteesCorrect
  3. CThe Sponsor
  4. DThe Custodian

Explanation

A mutual fund is set up as a trust. The trustees hold the property of the fund in trust for unitholders and oversee the AMC. The AMC manages the schemes, the sponsor only establishes the fund, and the custodian safekeeps securities.

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