NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Legal Structure of Mutual Funds in India
Which of the following is a role of the custodian in a mutual fund structure?
A custodian safekeeps the securities held by mutual fund schemes and supports settlement of trades and collection of corporate benefits. It does not manage investments, appoint trustees or issue offer documents, which are done by the AMC and sponsor respectively.
- AFixing the investment objective of a scheme
- BSafekeeping of the securities held by the schemesCorrect
- CAppointing the trustees of the fund
- DIssuing the offer document to investors
Explanation
A custodian is responsible for safekeeping the securities and assets of mutual fund schemes and handling related settlement and corporate action benefits. The AMC manages investments and issues documents, and the sponsor appoints trustees; fixing the objective is part of scheme design by the AMC with trustee approval.
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