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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 is the legal owner of the assets of the mutual fund schemes, holding them for the benefit of unit holders?

The trustees are the legal owners of the mutual fund assets. The fund is constituted as a trust, and the trustees hold its property for the benefit of unit holders. The AMC manages investments, the sponsor sets up the fund, and the custodian only holds securities.

  1. AThe Asset Management Company
  2. BThe Trustees of the mutual fund trustCorrect
  3. CThe Sponsor of the mutual fund
  4. DThe Custodian appointed for the schemes

Explanation

A mutual fund in India is set up as a trust. The trustees hold the trust property on behalf of the unit holders and are its legal owners. The AMC only manages the schemes, the sponsor establishes the fund, and the custodian merely safekeeps securities.

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