ORGANIZATION OF MUTUAL FUNDS

Mutual funds have a typical organization in which 5 key or special bodies or constituent are involved .They are :

1. The sponsors .
2. The Board of trustee (BOT) or Trust company(TC).
3. The Asset Management Company(AMC).
4. Custodian,and
5. The unit -holder.

Unit holders are formed by an investment adviser or sponsor who selects and appoints a BOT .BOT ,in turn ,hires or contract a separate AMC which is run by professional managers .

The AMC ,conducts the necessary research ,and ,based on this manage the fund or portfolio.It is responsible for floating ,managing ,redeeming the scheme ;it also handles the administration chores.It receives the fees for services rendered by it.

The custodian is responsible for coordination with brokers ,the actual transfer and storage of stocks ,and handling the property of the trust.He is answerable to AMC.

As per current regulation in force in india ,every MF proposed by sponsors has to be registered as a trust under the Indian Trust Act ,1982( and not a company under the Companies ACT,1956 ).All MFs have to be registered with the SEBI.

Some MFs in US charges their investors a sale fee for the cost involved in selling the funds,and they are called “load funds”.Those who don’t charges such a fee are called”no-load fund “.All funds charges their shareholder a management fee which is paid out of the fund’s income

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