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How do you decide which fund to invest in? The chances are that you pay attention to individual MF schemes offered by a fund house, including SIP<\/a> investment, equity funds, etc. Here, the assumption is that the fund house to which you transfer the funds will directly invest the sum into your chosen scheme.<\/p>\n\n\n\n However, the working of a mutual fund is more complex than that. Like any other company, a mutual fund house consists of employees at different levels performing different functions.<\/p>\n\n\n\n In this article, we tell you all about a mutual fund house\u2019s structure. We\u2019ll also outline the roles performed by each tier of employees in the fund house. Let\u2019s begin.<\/p>\n\n\n\n <\/p>\n\n\n\n SEBI (Securities and Exchange Board of India) is the regulatory body that manages all mutual funds in India. It has mandated a three-tiered structure for any fund house in India. These tiers are as follows –<\/p>\n\n\n\n Each of these tiers has specific responsibilities and specific eligibility criteria. Let\u2019s take a better look at each of them.<\/p>\n\n\n\n <\/p>\n\n\n\n In simple terms, a fund sponsor or guarantor is anyone who starts a mutual fund. This could be an individual or an individual partnered with another entity (associate company). The primary roles of a fund sponsor include –<\/p>\n\n\n\n Wondering about the eligibility requirements to become a sponsor? Well, here are the main criteria specified by the SEBI. Keep in mind that these criteria also apply to entities functioning as sponsors.<\/p>\n\n\n\n <\/p>\n\n\n\n After the sponsor creates the trust through a trust deed, the AMC appoints the board of trustees to keep track of the activities of the fund house and preserve the investor\u2019s faith in it. A trustee from the board of trustees could be a member of the board of directors, a bank, or a company approved by the Securities and Exchange Board of India.<\/p>\n\n\n\n Most fund houses appoint a minimum of four trustees to handle operations, or they select a trustee company with no less than four directors to run the fund. Of these, two-thirds will have to be independent. Additionally, the AMC cannot appoint trustees from the same group. This ensures there is no partiality involved during the appointment.<\/p>\n\n\n\n The primary functions of the trustees include:<\/p>\n\n\n\n And that\u2019s not all. Since the trustees are directly responsible for upholding the trust of investors, their functions also include the following-<\/p>\n\n\n\n Now that we know about the middle tier of the 3-tier mutual fund structure, it\u2019s time to uncover the final tier- AMCs or Asset Management Companies. Let\u2019s get into it.<\/p>\n\n\n\n <\/p>\n\n\n\n The Asset Management Company (AMC)<\/a> or the Fund Management Firm is also the functioning investment manager of the trust. But before that, it needs to get registered with the Government of India.<\/p>\n\n\n\n At present, there are three kinds of AMCs in India:<\/p>\n\n\n\n Here are the roles of AMCs:<\/p>\n\n\n\n In addition, the government\u2019s supervisory body has mandated a few extra rules to ensure businesses and roles of AMC employees do not clash. These include:<\/p>\n\n\n\n Now that we have covered the basic mutual fund<\/a> structure, let\u2019s have a quick look at the other employees necessary for the proper functioning of a mutual fund house.<\/p>\n\n\n\nWhat is the organisation structure of mutual funds in India?<\/strong><\/h2>\n\n\n\n
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1. Sponsor (or guarantor)<\/strong><\/h3>\n\n\n\n
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2. Trustees <\/strong><\/h3>\n\n\n\n
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3. Asset Management Companies (AMCs)<\/strong><\/h3>\n\n\n\n
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