Two primary things make investing a lot different from a mere lottery. The first factor is the research associated with investing. It is not guesswork, and analysis often pays off. Second is the regulation. Investments are closely regulated to ensure the interest of investors is protected at all costs.
But who regulates mutual funds? What does regulation entail? Let us find out.
What is a mutual fund?
A mutual fund invests the money of many people with the same investing goals in various securities, such as stocks, bonds, money market instruments, and so on. After subtracting fees and levies, a plan’s “Net Asset Value,” or NAV, is used to distribute the remaining income or profits from the investment to the participants in the scheme by their respective investment amounts. Mutual funds are essentially pools of capital from many different investors.
Mutual funds are a great option for people who want to grow their money but may not have the time or resources to do extensive market research. Professional fund managers manage the money in mutual funds so that they achieve the scheme’s stated goal. The fund house takes a cut of the investment as payment for its services.
Who is the regulator of securities and trading in India?
The Securities and Exchange Board of India (SEBI) is the primary regulator for Stock Exchanges in India. It was formed as the regulatory body under the SEBI Act 1992. The key roles of SEBI are investor protection, market development and regulation, and promotion of the Indian securities markets. Regulations issued by SEBI apply to all local and international financial intermediaries that are authorized to trade in the Indian securities markets. To invest in the Indian stock market, foreign portfolio investors must first get registered with a DDP.
Who regulates mutual funds in India?
The Association of Mutual Funds in India (AMFI) regulates mutual funds in India. The mission of the Association of Mutual Funds in India (AMFI) is to develop the Indian Mutual Fund Industry along lines that are professional, healthy, and ethical; to enhance and maintain standards in all areas, and to do so to protect and promote the interests of mutual fund investment sip and the people who own units in those funds.
AMFI was established as a not-for-profit organization on August 22, 1995. AMFI is the association of all of the Asset Management Companies in India. There are now 43 Asset Management Companies that are members of the organization and are registered with SEBI.
Rules and responsibilities of AMFI
- To establish and maintain rigorous professional and ethical standards for all facets of the mutual fund
- To advocate for, and spread awareness of a set of standards for doing business in the mutual fund and asset management industries, as well as other related industries and government organizations.
- As a representative of the mutual fund industry, communicate with and advocate before the Securities and Exchange Board of India (SEBI).
- Representing the Indian mutual fund industry to the government, the Reserve Bank of India, and other relevant agencies.
- To organize a country-wide campaign to educate potential investors on the idea and operation of mutual funds.
- To educate the public about the mutual fund industry by disseminating relevant data gleaned from primary and secondary sources and through joint research efforts with other organizations.
- To implement disciplinary measures (ARN cancellation) against distributors who violate the Code of Conduct.
Conclusion
AMFI is a gatekeeper of mutual funds in India. Hence, ensure you check with AMFI websites for information regarding something related to mutual funds.
