NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Legal Structure of Mutual Funds in India
Under the three-tier structure of a mutual fund in India, which entity holds the assets of the mutual fund scheme on behalf of the unit holders?
The trustee company or board of trustees holds the scheme's assets on behalf of the unit holders, because a mutual fund is constituted as a trust. The sponsor merely sets up the fund and the AMC manages the investments under trustee oversight.
- AThe sponsor
- BThe trustee company or board of trusteesCorrect
- CThe asset management company
- DThe registrar and transfer agent
Explanation
Mutual funds in India are set up as trusts. The trust property is held by the trustees for the benefit of unit holders. The sponsor only establishes the fund, and the AMC manages the investments. The RTA provides unit-related services.
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