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Wednesday, September 29, 2010

Audit of Mutual Funds: Mutual Funds Constituents

AMC: A company that invests its clients' pooled fund into securities that match its declared financial objectives. These companies earn income by charging service fees to their clients.
Sponsor: The sponsor initiates the idea to set up a mutual fund. It could be a registered company, scheduled bank or financial institution. The sponsor appoints the trustees, AMC and custodian. Once the AMC is formed, the sponsor is just a stakeholder.
Trust/board of trustees: Trustees hold a fiduciary responsibility towards unit holders by protecting their interests. Sometimes, as with Canara Bank, the trustee and the sponsor are the same.

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