NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Collective Investment Vehicles
Which of the following best describes the legal structure of a mutual fund in India?
A mutual fund in India is structured as a trust. The sponsor settles the trust, and trustees hold the scheme assets for the benefit of unit holders, while an AMC manages the investments. It is not a company, partnership or cooperative society.
- AA company registered under the Companies Act that issues units to the public
- BA trust in which the sponsor settles the trust, with trustees holding scheme assets for unit holdersCorrect
- CA partnership between the AMC and the investors
- DA cooperative society formed by the unit holders
Explanation
Mutual funds in India are set up as trusts under the Indian Trusts Act, with the sponsor as settlor. Trustees hold the property for the benefit of unit holders, and an AMC manages the schemes. A company or partnership form is not used.
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