Organization and Management of Mutual Funds:

Structural Pattern

Mutual Funds, usually formed as trusts, generally involve three parties viz.,

• Settler of the trust or the sponsoring organization.
• The trust formed under the Indian Trust Act, 1882 or the trust company registered under the Indian Companies Act, 1956.
• Fund managers or the merchant banking unit.
• Custodians.

While in the USA and other countries an "arms length" distance is maintained between settlers, trustees and fund managers, in India, very often, there is an overlapping of roles. For example, in the case of Canbank Mutual Fund, Canara Bank is the settler or sponsor, members of Canara Bank's board form the trust company as trustees and the subsidiary of Canara Bank Canbank Financial Services Ltd., serves as fund managers.

Let us take a look at the organization and management pattern of Unit Trust of India (UTI) vis-a-vis the organization and management pattern of some other Mutual Funds established by banks or insurance companies.