Can mutual fund house hold the money without investment or creating portfolio?

The mutual fund is registered as a trust with the provisions of the Indian Trusts Act, 1882, by a sponsor.

The Asset Management Company (AMC) is approved by the Securities and Exchange Board of India (SEBI) to act as a management company of the Mutual fund. Asset Management Companies (AMC), or fund houses are organizations that collect the investment from investors and invest the money collected into financial instruments like equities, mutual funds, securities, etc In simple words, these companies manage the money pooled from a number of investors and do not hold the money collected from the investors with them.

AMC is answerable to the trustees and they have to submit a quarterly report on the activities performed by the AMC.

AMC does not undertake any activities which are conflicting with the management of the mutual fund.

They have to make relevant disclosures to investors in working of AMC operations like calculating NAV, portfolio details sending half-yearly accounts to the investors, etc.

They also have to file the details of transactions done which is greater than 1 lac by the AMC Directors on a quarterly basis with the trustees of the Mutual Fund