Share Market

These days between work, family, and friends, most of us do not have the time to make or monitor personal investment decisions on a regular basis. Mutual funds have competent professionals who do all this for you. This is the reason why, the world over, they have become the most accepted means of investing.

Mutual funds curtail risk by creating a diversified portfolio while providing the essential liquidity. Additionally, you benefit from the expediency of not having to bother with too much paperwork or repeat transactions. It is our belief that investors vary in their investment needs based on their individual financial goals.

The only goal of a Mutual Fund company is to earn good returns out of the investments. In order to achieve this goal, there are multiple players, working together, each player being a key entity involved in Mutual funds.

Sponsor:

Any registered company or a financial institution is called a sponsor. A sponsor is the most important entity of a fund. As per SEBI, a sponsor must have a good financial record in past.

Board of Trustees:

Mutual Funds in India have a Board of Trustees to run the fund. The power completely lies with the trust, thought the third party, AMC (Asset Management Company) is appointed by the trustees. They can even dismiss the Asset Management Company if it is found doing unethical practices or underperforming.

Custodian:

It is an independent entity that holds and safe keeps the assets. Mostly financial institutions or banks act as custodians.

Asset Management Company

It is the prime entity of any fund. It manages all the investments made by the investors. Records of pricing and accounting of data is looked after by these Asset Management Companies. It also calculates the Net Asset Value of the funds.

Fund Managers/ Portfolio Managers:

Under an Asset Management Company, there are Fund Managers or Portfolio Managers, who take necessary decisions related to the investments made by the investors. They are the person who monitor and manage your funds and investments.

There are some other entities involved with their prominent roles, which could be seen in the following flowchart:

Key entities involved in Mutual Fund: Flowchart