• 12. ''The Mutual Fund structure has served the Industry well in India.'' What are the important constituent of the Indian Mutual Fund Industry?

    There has been growing concern about the advertising practices of Mutual Fund houses. They hype and misinterpret the investment benefits of their schemes through the TV and radio advertisements . To curb such practice, SEBI issued guidelines which make it mandatory that while advertising Mutual Fund products, the risk pattern involved should be disclosed and the advertising Mutual Fund Products , the risk patterns involved should be disclosed and the performance of that particular Fund should be compared with standard benchmarks and standard periods of time to help investors. SEBI has also ordered changing the name of Mutual Funds' initial offerings from Initial Public Offering (IPOs) to New Fund Offering (NFOs) , as investors mistook them for a company's IPO. Meanwhile , corporate governance regulations in the Industry have become stringent related to appointing directors in AMCs and trustees, and in making disclosure to investors. The Mutual Funds structure has served the Industry well in India. At least 50% of AMC directors are independent and in the case of trustees, two-thirds are independent. Disclosure norms say that all Mutual Funds should disclose their financial statements biannually and their market practice (current porttions and investments in market) monthly.

    Ans: A Mutual Fund in India constitues:

    • Sponsor
    • Board of Trustees
    • Asset Management Company (AMC)
    • Custodians 
    • Registrar & Transfer Agents
    • Distributors.