Question

Note: BOOK : The Fund Industry : How Your Money Is Managed

2. What are the main types of service providers to a mutual fund, which has a board of directors but usually no employees?

3. What is the unique procedure available to fund shareholders for challenging a fund adviser’s management fees as excessive? What factors do courts use in determining excessive fees?

4. What are the critical differences between mutual funds and closed-end funds? Why do you think closed-end funds have declined in popularity relative to mutual funds?

5. How are exchange-traded funds (ETFs) and unit investment trusts (UITs) different from index mutual funds, and from each other?

Answer 1

Solution 2:

A mutual fund is a pool of shares, bonds and other securities owned by fund shareholders.Mutual fund is externally managed and it has no employee in traditional sense. The main service providers to a mutual fund are either affilliate organizations or indendent vendors like distributor, custodian, transfer agent, investment advisore etc. Mutual fund relies on these third parties to invest money of funds and perform other business activities.

All mutual funds are required to have a board of directors.