8. The sponsor establishes the mutual fund and registers the same with SEBI. It appoints the Trustees, the AMC and Custodians with prior approvals of SEBI and in accordance with SEBI regulations. Sponsor must have a 5-year track record of business interest in the financial markets. Above all the sponsor should have been making profit in at least 3 out of 5 in the time period stated above.
10. In India mutual fund is a form of a Public Trust created under the Indian trust Act 1882. The fund sponsor acts as the settler of the trust, contributes the initial capital and appoints the trustees to hold the trust for benefit of the unit holders. There must be at least 4 members in the board of trustees and at least 2/3 of the members of the board of trustees must be independent. Trustee of one mutual fund cannot be a trustee of another mutual fund. They are the primary guardians of the unit-holders’ funds and assets. The 3rd schedule of SEBI regulations specifies the content of trust deed.
12. Trustees appoint the AMC, in consultation with the sponsor and according to SEBI Regulations. All Mutual Fund Schemes floated by the AMC have to be approved by the Trustees.
13. Trustees can seek remedial actions from AMC, and in cases dismiss the AMC.
15. Trustees must ensure due diligence on the part of AMC in the appointment of constituents and business associates. Trustees must furnish to the SEBI, on half yearly basis a report on the activities of the AMC. Trustees must ensure compliance with SEBI regulations. SEBI Regulations require that the meeting of the trustees should be held at least once in every two months.
18. Only SEBI registered AMC can be appointed as investment managers of mutual funds. AMC must have a minimum net worth of Rs. 10 Cr at all times. An AMC cannot be an AMC or Trustee, of another Mutual Fund. AMC’ s cannot indulge in any other business, other than that of asset management. At least half of the members of the Board of an AMC have to be independent. The 4th Schedule of SEBI regulations spells out rights and obligations of both trustees and AMCs.
19. The agreement between the Trustees and the AMC is known as “Investment Management Agreement”.
21. The sponsors, or the trustees, if authorized by the trust deed appoint the AMC. The AMC is usually a private limited co., in which the sponsors and their associates or JV partners, are shareholders. The AMC has to be a SEBI registered entity, with a minimum net worth of Rs. 10 Cr. The trustees sign an investment management agreement with the AMC, which spells out the functions of the AMC.
79. This graph is a comparison between sensex and the Net asset value of Mutual Fund. We see here that the NAVs of the mutual fund and the sensex have both been affected by the recession and they have both recovered after the initial meltdown. However in the case of fund the NAV has exceeded the value on 1-1-2008 but sensex is yet to reach that level. But the value at both the extremes has a very minimal difference and there is every possibility that the sensex will surpass its value on 1-1-2008.
83. This graph is a comparison between sensex and the Net asset value of Mutual Fund. We see here that the NAVs of the mutual fund and the sensex have both been affected by the recession and they have both recovered after the initial meltdown. However in the case of fund the NAV has exceeded the value on 1-1-2008 but sensex is yet to reach that level. But the value at both the extremes has a very minimal difference and there is every possibility that the sensex will surpass its value on 1-1-2008.
87. This is a graph that showcases the minimum risk associated with the GILT funds. The value of NAV of the fund is not affected by the share market fluctuations. The NAV value is also steadily increasing and has surpassed the value on 1-1-2008. If we look at the sensex it has more or less recovered but does not have any significant effect on the return of the fund. Hence GILT funds are largely safe to invest in comparison to equity funds.
91. This is a graph that showcases the minimum risk associated with the GILT funds. The value of NAV of the fund is not affected by the share market fluctuations. The NAV value is also steadily increasing and has surpassed the value on 1-1-2008. If we look at the sensex it has more or less recovered but does not have any significant effect on the return of the fund. Hence GILT funds are largely safe to invest in comparison to equity funds.
95. This graph is a comparison between sensex and the Net asset value of Mutual Fund. We see here that the NAVs of the mutual fund and the sensex have both been affected by the recession and they have both recovered after the initial meltdown. However in the case of fund the NAV has exceeded the value on 1-1-2008 but sensex is yet to reach that level. But the value at both the extremes has a very minimal difference and there is every possibility that the sensex will surpass its value on 1-1-2008.
96.
97. To find out the effect of recession on Indian Mutual Fund Industry