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Ch.2 · Mutual Fund Structure Basics · medium

Which of the following is the correct hierarchy in a mutual fund structure?

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EXPLANATION

The correct hierarchy is: Sponsor sets up the mutual fund → Trustee holds the fund in trust for unit holders and oversees the AMC → AMC manages the investments → Unit holders are the beneficial owners of the fund's assets. SEBI regulates all entities throughout.

A.SEBI → AMC → Trustee → Sponsor

B.Sponsor → Trustee → AMC → Unit holders [✓ Correct]

C.AMC → Sponsor → Trustee → SEBI

D.Trustee → Sponsor → AMC → SEBI

EXPLANATION

The correct hierarchy is: Sponsor sets up the mutual fund → Trustee holds the fund in trust for unit holders and oversees the AMC → AMC manages the investments → Unit holders are the beneficial owners of the fund's assets. SEBI regulates all entities throughout.

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