Setting-up a Mutual Fund

Setting up a mutual fund involves a number of steps and requires compliance with various regulatory requirements. Here is an overview of the process:

Identify the type of mutual fund: The first step in setting up a mutual fund is to determine the type of fund that will be established. This includes deciding on the investment objective of the fund, such as investing in Treasury securities, and the type of investors that the fund will target.

Choose a sponsor: The next step is to choose a sponsor for the mutual fund. The sponsor is responsible for the creation of the mutual fund and typically provides seed capital to launch the fund.

Choose a trustee or custodian: The trustee or custodian is responsible for holding the assets of the mutual fund and ensuring compliance with regulatory requirements. They also provide oversight and audit services for the mutual fund.

Register with SEBI: The mutual fund must be registered with the Securities and Exchange Board of India (SEBI), which is the regulatory body for the securities market in India. The SEBI registration process involves submitting a detailed application that includes information on the investment objective, investment strategy, and other details about the fund.

Draft a prospectus: The prospectus is a legal document that provides information about the mutual fund, including its investment objectives, risks, fees, and expenses. The prospectus must be prepared in accordance with SEBI regulations and must be filed with the SEBI for approval.

Appoint a fund manager: The fund manager is responsible for managing the portfolio of the mutual fund and making investment decisions. The fund manager is typically chosen based on their investment expertise and experience.

Launch the mutual fund: Once all the regulatory requirements have been met and the prospectus has been approved, the mutual fund can be launched. The mutual fund can be offered to investors through a variety of channels, including banks, financial advisors, and online platforms.

Setting up a mutual fund requires careful planning and compliance with regulatory requirements. Working with experienced professionals can help ensure that the process goes smoothly and that the mutual fund is set up in accordance with SEBI regulations.

A mutual fund is set up in the form of a trust, which has sponsor, thruster, Assets Management Company (AMC) and custodian. The trust is established by a sponsor who is like a promoter of a company. The trusted of the mutual fund holds its property for the benefit of the unit holders. The Assets Management Company (AMC) approved by SEBI manages the fund by making investments in various types of securities. The Custodian, who is registered power of superintendence and direction over the AMC. They monitor the performance and compliance of SEBI Regulations by the mutual fund.