Structure of Mutual Funds.....

In India, mutual funds function as trust created under the Indian Trust Act, 1882. There are three layers of mutual funds in India.

(i) Sponsors
(ii) Trustee and
(iii) Asset Management Company(AMC).

Sponsors work as promoters of the company. They take responsibility of starting mutual fund business. Sponsors contribute initial capital and appoint Trustees and Board of Trustees.

Board of Trustees then act as guardians of investors and ensure that money invested by investors is used according to the objective of the scheme.

Whereas, Asset Management Company(AMC) is the public face of fund management business. Sponsors and Trustees together form AMC and appoint Fund Manager. Fund manager then with the help of fund management team makes all the investment decisions.