A Mutual Fund is a trust that pools the savings of a number of investors who share common financial goal, investments may be in shares, debt securities, money market securities or a combination of these. Those securities are professionally managed on behalf of the unit-holders, and each investor holds a pro-rata share of the portfolio i.e. entitled to any profits when the securities are sold, but subject to any losses in value as well.The Mutual Fund is constituted as a trust in accordance with the provisions of the Indian Trusts Act, 1882 by the Sponsor.

The Trustee as the Investment Manager of the Mutual Fund appoints the Asset Management Company. The AMC is required to be approved by the Securities and Exchange Board of India (SEBI) to act as an asset management company of the Mutual Fund. At least 50% of the directors of the AMC are independent directors who are not associated with the Sponsor in any manner. The AMC must have a net worth of at least 50 crores at all times.The AMC is responsible for conducting the activities of the mutual fund. It therefore arranges for the requisite offices and infrastructure, engages employees, provides for the requisite software, handles advertising and sales promotion, and interacts with regulators and various service providers.

Day to day operations of mutual fund is handled by the AMC.The AMC is responsible for conducting the activities of the mutual fund. It therefore arranges for the requisite offices and infrastructure, engages employees, provides for the requisite software, handles advertising and sales promotion, and interacts with regulators and various service providers.

The custodian has custody of the assets of the fund. As part of this role, the custodian needs to accept and give delivery of securities for the purchase and sale transactions of the various schemes of the fund. Thus, the custodian settles all the transactions on behalf of the mutual fund schemes.

The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer Agent to the Mutual Fund. The Registrar processes the application form; redemption requests and dispatches account statements to the unit holders. The Registrar and Transfer agent also handles communications with investors and updates investor records.Their offices in various centers serve as Investor Service Centers (ISCs), which perform a useful role in handling the documentation of investors. 

To do away with multiple KYC formalities with various intermediaries, SEBI has mandated a unified KYC for the securities market through KYC Registration Agencies (KRA) registered with SEBI. 

Central KYC (cKYC) refers to Central KYC (Know Your Customer), an initiative of the Government of India. The aim of this initiative is to have a structure in place which allows investors to complete their KYC only once before interacting with various entities across the financial sector. 

Payment Aggregators such as Tech Process, Bill Desk etc. are service providers that facilitate payment processing in the online market place. Payment aggregators enable the users to make the payments online through their existing bank account in a secured and a convenient manner.

Securities and Exchange Board of India (SEBI) is the regulatory authority for securities markets in India. It regulates, among other entities, mutual funds, depositories, custodians and registrars and transfer agents in the country.

Association of Mutual Funds in India(AMFI) is an industry body that has been created to promote the interests of the mutual funds industry. Asset Management  Companies (AMCs) in India are members of Association of Mutual Funds in India (AMFI).

Consolidated account statement gives an investor all the details of his or her mutual fund transactions in an orderly manner at a single place. It is an essential document for investors as it carries every information regarding sale, purchase and other transactions in a mutual fund. This gives a proper insight for investors about how to track mutual fund performance.

This statement provides information in terms of name of schemes where the investor has invested, number of units held and its market value.

Mutual funds and stock funds are managed based on a specific investment objective. That objective will determine the fund's role in your investment portfolio and how it fits into your overall investing strategy. Your objective can determine the types of stocks that your fund's manager purchases. This defines the broad  investment charter.

For example, a stock mutual fund’s objective will be either capital appreciation, income from equities, or both. A stock fund might have both growth and income as objectives, or its primary objective might be capital appreciation, with income as a secondary objective.

The investment strategy of the scheme outlines the approach to be followed in investing the funds to achieve the objective. This includes factors such as the investment horizon that the fund manager will consider when evaluating securities for inclusion in the portfolio, approach to be followed in selecting securities such as research-based or market-driven, method of determining the appropriate buying price for the securities, selling discipline to be followed, extent of flexibility to be allowed in investing in different asset classes and so on.

The Investment Policy describes in greater detail, the kind of portfolio that will be maintained. For example, for equity funds, the investment policy specifies the sectors and companies in which the fund invests.

No, a mutual fund can never go bankrupt ! To understand this better, let us analyze the structure of a mutual fund.

In a mutual Fund, the AMC (Asset Management Company) manages the investments and the assets are held by the custodian. Both the AMC and the custodian are controlled by the trustees who are put in place by the sponsors of the mutual fund.

If one of the sponsors want to move out, they have to bring in another sponsor who will have to put in place a new framework of trustees, AMC etc. And if the investor is not comfortable with the new sponsor, he has an option of exiting from the fund with the full NAV within 30 days.

Moreover, the custodian holding the assets is independent of the AMC or the sponsor. This provides structural protection to the assets and the investors’ interest.

Thus, the structure of a mutual fund ensures that the investor is fully protected from all contingencies like misappropriation of funds, fraud etc.

Your Mutual Fund investment can trade below par, perform below expectations but can never go bust causing you to lose your entire investment

Different countries have different invesment norms and bodies to regulate the framework. In India, mainly the legal & regulatory environment is regulated by SEBI and RBI.