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An Introduction to Mutual Funds Worldwide by Ray Russell

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Chapter2

THE MANAGEMENT OF FUNDS

2.1 WHO RUNS MUTUAL FUNDS?

Mutual funds are run by professional fund managers, who may choose to appoint other professional bodies to undertake, under contract, one or more aspects of running their funds, such as:

  • investment managers – to manage the portfolio of investments;
  • marketing companies – to advertise and promote the funds;
  • selling agents – to actively sell the funds' shares or units;
  • administrators – to perform accounting and servicing functions;
  • registrars or transfer agents – to maintain the registers of share- or unit holders.

Sometimes, it is the trustee of a trust who not only has responsibility for the safe custody of fund assets but also has responsibility for maintenance of the register of holders. More typically it is the manager who fulfils that duty, if necessary by delegated appointment by the trustee. Regulations typically require that the manager does not perform the function of custodian of fund assets, and that this is the responsibility of an independent custodian, depositary or trustee, in whose name the fund's assets are to be held or registered.

Though these third parties are usually regulated firms themselves and appointed by the manager, they are accountable to the shareholders and the regulators for the safe-keeping of the fund's assets, whether under their control directly or via the services of a sub-custodian. This is one function that may not normally be delegated to the manager, any more than the manager may ...

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