What is the organizational structure of a mutual fund?
A mutual fund is like a big basket that collects money from different people (investors) and invests it in various things such as stocks, bonds, or other assets. This basket is managed by experts who aim to grow the money over time. Let’s break down how a mutual fund works by understanding the key parts of its structure and participants.
Key Players in the Mutual Fund Structure
- Sponsors
Sponsors are the founders or creators of a mutual fund. They set up the fund and ensure everything is in place, including appointing trustees to oversee its operations. Sponsors also ensure that the fund complies with the rules set by SEBI (Securities and Exchange Board of India).
For example, ICICI Bank and Prudential Plc are the sponsors of the ICICI Mutual Fund.
Sponsors must meet strict conditions such as having at least five years of experience in financial services and maintaining a positive net worth during that time.
- Trustees
Trustees act as the watchdogs of the mutual fund. Their main job is to protect the interests of the investors and ensure the fund is managed responsibly. Trustees oversee the operations of the Asset Management Company (AMC) and make sure everything complies with SEBI regulations.
For instance, ICICI Trust Limited is the trustee for ICICI Mutual Fund.
At least two-thirds of the trustees in a mutual fund must be independent, meaning they should not be connected to the sponsor.
- Asset Management Company (AMC)
The AMC is like the manager of the mutual fund. Based on the fund’s goals, it decides where to invest the collected money, whether in stocks, bonds, or other securities. The AMC also handles the fund’s day-to-day operations.
For example, ICICI Prudential Asset Management Company Ltd is the AMC for the ICICI Mutual Fund.
India has 44 AMC managing various mutual fund schemes, including well-known names such as:
- HDFC Mutual Fund
- SBI Mutual Fund
- Tata Mutual Fund
- Axis Mutual Fund
Other Important Participants
- Custodians: They safeguard the fund’s assets and handle the delivery of securities. They also update investors about their holdings and manage benefits like bonuses and dividends.
- Registrar and Transfer Agents (RTAs): RTAs maintain investor records, process applications, and provide regular updates. For example, CAMS and KFintech are major RTAs in India.
- Auditors: Auditors check the fund’s finances to ensure transparency and compliance with regulations.
- Brokers: Brokers help buy and sell securities in the stock market on behalf of the AMC.
- Intermediaries include distributors, agents, and bankers who help investors choose and invest in mutual funds.
Here’s the list of 44 Asset Management Companies (AMCs) in India in table format:
| Sr. No. | Kfintech | CAMS |
| 1 | Axis Mutual Fund | HDFC Mutual Fund |
| 2 | Baroda Mutual Fund | ICICI Mutual Fund |
| 3 | Bank Muscat | Aditya Birla Sun Life Mutual Fund |
| 4 | BNP Paribas Mutual Fund | SBI Mutual Fund |
| 5 | BOI AXA Mutual Fund | HSBC Mutual Fund |
| 6 | CANARA ROBECO Mutual Fund | Kotak Mutual Fund |
| 7 | Edelweiss Mutual Fund | 360 ONE Mutual Fund |
| 8 | Grow Mutual Fund | PPFAS Mutual Fund |
| 9 | INVESCO Mutual Fund | Union Mutual Fund |
| 10 | ITI Mutual Fund | Bandhan Mutual Fund |
| 11 | JM Financial Mutual Fund | Helios Mutual Fund |
| 12 | LIC Mutual Fund | DSP Mutual Fund |
| 13 | Mirae Asset Mutual Fund | Tata Mutual Fund |
| 14 | Motilal Oswal Mutual Fund | IDFC Mutual Fund |
| 15 | Navi Mutual Fund | Mahindra Manulife Mutual Fund |
| 16 | Nippon Mutual Fund | Whiteoak Capital Mutual Fund |
| 17 | NJ Mutual Fund | Shriram Mutual Fund |
| 18 | PGIM India Mutual Fund | |
| 19 | Quant Mutual Fund | |
| 20 | Quantum Mutual Fund | |
| 21 | SAHARA Mutual Fund | |
| 22 | SAMCO Mutual Fund | |
| 23 | Sundaram Mutual Fund | |
| 24 | Trust Mutual Fund | |
| 25 | Taurus Mutual Fund | |
| 26 | UTI Mutual Fund | |
| 27 | Bajaj Finserv Mutual Fund |
How Does This Structure Benefit Investors?
The mutual fund structure is carefully designed to protect investors’ money. Each participant has a specific role, ensuring the system is transparent, regulated, and efficient. With SEBI’s oversight, mutual funds remain a trusted way for people to grow their wealth while diversifying their investments.
By understanding these parts, you can make smarter investment decisions and confidently explore the world of mutual funds!
- Custodian
The custodian protects and keeps the securities (like stocks or bonds) the mutual fund buys. They are like the safe keepers of the fund’s investments, ensuring everything is safe and secure. For example, HDFC Bank is the custodian of the ICICI Prudential Mutual Fund. - Registrar & Transfer Agents (R&T)
R&T agents are in charge of handling the paperwork for mutual fund investors. They process the application forms when someone buys or sells mutual fund units, send out account statements, and ensure that investors’ information is updated. Two main R&T agents in India are CAMS and Karvy, which handle transactions for several mutual funds. - Regulator
The Securities and Exchange Board of India (SEBI) is the primary authority overseeing mutual funds in India. SEBI ensures that mutual funds follow the rules and protect investors. It sets the guidelines for mutual funds and safeguards investors’ rights. The Association of Mutual Funds in India (AMFI) is another essential body that helps mutual funds operate smoothly and recommends best practices.
Understanding the structure of a mutual fund helps you see how your money is being managed. It’s important to know that these different parts of the mutual fund work together to ensure that your investment is safe and that the fund operates according to the rules. So, when you invest in a mutual fund, you can be confident that professionals are managing it carefully and responsibly.
