IFIC Mutual Funds Licensing Practice Exam · Question
What is the primary role of the trustee or custodian in a mutual fund structure?
The trustee or custodian holds the fund's assets (securities, cash) separate from the fund manager's own assets, providing safekeeping and ensuring the fund ope
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Question: What is the primary role of the trustee or custodian in a mutual fund structure?
Answer options:
- To manage the fund's investment portfolio.
- To sell fund units to investors. ✅ To hold the fund's assets in safekeeping and ensure compliance with regulatory requirements.
- To set the fund's investment objectives.
Correct answer: To hold the fund's assets in safekeeping and ensure compliance with regulatory requirements.
Explanation: The trustee or custodian holds the fund's assets (securities, cash) separate from the fund manager's own assets, providing safekeeping and ensuring the fund operates according to its trust deed and regulatory requirements. They do not manage the portfolio or sell units.
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