You might be wondering what entities work under the Mutual Funds organization. In this article, we will discuss the entities inside Mutual Fund organizations. There are nine different entities within the organization. We will discuss briefly each and every role.
- Sponsor/Investment advisor
- Board of directors
- Transfer agent
- Independent public accountant
- Shariah advisor
It is one of the significant parts of the Mutual Funds Organization. Shareholders in an organization that offers Islamic mutual funds have special voting rights, similar to those in other organizations, such as a vote to elect directors at meetings. Other issues involve the role of shareholders such as deciding the management fees, investment objectives, and fundamental policies. They cannot be modified unless a majority of shareholders approves the change.
2. Investment advisor
This is an important role since the advisor advises the fund manager on how to direct the funds. Investment advisers choose employees, including investment professionals who operate on behalf of the funds’ shareholders. The role entails deciding which stocks to acquire and sell in the portfolio of Islamic mutual funds while adhering to the funds’ objectives and standards. In addition to managing the portfolio, the investment advisor also assists with the fund’s administration (back-office services).
3. Principal underwriters
The fund’s distributor is the fund’s principal underwriter. Investors can buy and sell fund shares directly or indirectly through the fund’s distributor in this situation. They offer and sell assets to investors under tight restrictions.
4. Board of directors
On behalf of the fund’s shareholders, the board of directors oversees the fund’s management and operations. Besides, they also have significant and specific responsibilities under the federal securities laws. Among their responsibilities are performance evaluation, contract approval, fee approval, pricing of fund shares, and oversight of portfolio management and compliance issues. Additionally, the directors continuously review the performance of the fund’s investment performance.
5. Transfer agents
Transfer agents are the agents that maintain the records of shareholder accounts, compute and distribute dividends and capital gains, and prepare the shareholders’ account statements. They are especially responsible for other shareholder notices.
6. Independent public accountant (auditors)
The job of the auditor is to certify the fund’s financial statements.
Fund assets that are separate from the adviser’s assets must be in strict custody by all funds. For instance, domestic securities should be held by the government. Foreign securities must be kept in a foreign bank or securities depository, whereas domestic securities must be kept in a domestic custodian.
8. Shariah Advisor
Shariah advisors are responsible for ensuring that all securities are Shariah-compliant, as well as overseeing the practice and management of Islamic mutual funds. This is to keep illegal activities like gambling from taking place.
This administrator is in charge of any administrative tasks that the investment advisor is unable to do such as fund accounting services, data processing, bookkeeping, internal audits, and other reports.
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