AMFI Exam Tips series -6

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In this series we will be discussing on Types of Mutual Funds where in we will discuss in detail about

Mutual FUND Groups
Fund Board of Directors
Investment Advisor
Fund Officers
Fund Distributor (Principal Underwriter)
Broker-Dealer
Custodian
Transfer Agent
Financial Data Services

The mutual fund industry is comprised of numerous players, each with a specific role in creating, marketing and supporting mutual fund products. This chapter provides an overview of how these players function, and a brief explanation of each party’s unique role.
The FUND Group, sometimes also referred to as the management company, (but not to be confused with the individual funds which are themselves defined as “management companies”) organizes the mutual fund, and is responsible for all of the steps involved in starting the fund, including registration with the SEC.
The management company is the initial shareholder of the fund and must, by law start the fund with an initial investment of at least $100,000 referred to as seed money.
Also as the initial shareholder of the fund, the management company selects the first board of directors, which in turn approves the investment management contract, often with the management company which just formed it.
The management company often also serves as the fund’s administrator. Responsibilities of the fund administrator might include:

· overseeing the performance of the various service providers
· handling certain tax filings for the fund
· providing the facilities for fund personnel
· supplying general accounting servicesdeveloping internal controls

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