Who manages mutual funds?

Are you interested in learning about the working of mutual fund schemes? Has the system of mutual fund always intrigued your thoughts? Here’s a list of parties you need to know about before you start investing!

Parties involved in mutual fund investing:

In India, a mutual fund is set up as a trust. A sponsor establishes the fund, trustees hold its assets in trust for investors, an asset management company (AMC) manages the schemes and a custodian holds the securities. The fund must be registered with SEBI, and the trustees, AMC and custodian approved by or registered with SEBI, under the SEBI (Mutual Funds) Regulations, 1996.

• Sponsor

The sponsor is the person or company that establishes the mutual fund, much like the promoter of a company. The sponsor must meet SEBI’s eligibility conditions and contributes to the net worth of the AMC.

• Asset Management Company

The AMC is a company approved by SEBI to manage the fund’s schemes. Its fund managers make the investment decisions, within each scheme’s stated objective and SEBI’s rules.

• Participants

Participants are the ones investing in a mutual fund i.e. the investors who are interested in mutual fund investing.

• Trustee

The trustees hold the fund’s property in trust for the unitholders and oversee the AMC, checking that schemes are run in line with SEBI’s regulations and the scheme documents. The trustees can be a trustee company or a board of trustees, appointed with SEBI’s approval, and at least two-thirds of them must be independent of the sponsor.

• Custodian

The custodian, registered with SEBI, keeps the fund’s securities in safe custody and handles the settlement of its trades. Overseeing the AMC is the trustees’ responsibility, not the custodian’s.

• Registrar

A registrar of a mutual fund may be an individual or a firm/company. The AMC may itself act as a registrar, or appoint the registrar to perform functions like maintaining the register of unitholders, dealing with the unitholders, issuing statements to unitholders,
etc.

Mutual fund investing with EquityBox:

Equity box understands and analyses each mutual fund scheme that its client is interested in. We provide services through both SIP schemes and lump sum investing. We explain how each scheme works, what it costs and what its risks are, so that clients understand where their money is invested before they decide. Mutual fund distribution is carried out by Vedansh Wealth LLP, an AMFI-registered mutual fund distributor (ARN-255613).