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

Which of the following best describes the role of the Asset Management Company (AMC) in the structure of a mutual fund in India?

The Asset Management Company manages the scheme's investments and day-to-day operations on behalf of the trustees. Custody of securities rests with the custodian, the sponsor establishes the fund, and SEBI handles registration and regulation, so those options describe other parties.

  1. AIt holds the securities and cash of the scheme in safe custody
  2. BIt sponsors the trust and contributes the minimum net worth
  3. CIt manages the scheme's investments and operations on behalf of the trusteesCorrect
  4. DIt registers the mutual fund and approves the scheme advertisements

Explanation

The AMC is appointed by the sponsor or trustees to manage the schemes, make investment decisions and run operations, subject to trustee oversight. Safekeeping is the custodian's job, sponsoring is the sponsor's role, and registration and regulation belong to SEBI.

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