The sponsor
The promoter who starts the fund
The sponsor is the party that starts the whole thing, so SEBI vets it hardest. Two numbers do most of the work in the exam: five years, and forty percent.
Thresholds such as the 40% contribution and net-worth figures are set by SEBI and can be revised. The full lesson shows the current figure with its source. Education for the NISM Series V-A exam, not financial advice.
- 1
The sponsor is the promoter who sets up the mutual fund, much like the promoter of a company.
- 2
SEBI checks the sponsor before allowing the fund: a sound track record over the last 5 years.
- 3
The sponsor must have net profit in 3 of the last 5 years and a positive net worth across those years.
- 4
The sponsor must contribute at least 40% to the net worth of the AMC. Below 40%, you are not the sponsor.
- 5
A newer route, the self-sponsored AMC, lets a qualifying AMC run without a traditional sponsor.
If a bank wants to start a mutual fund, it must show five clean years, put in at least 40% of the AMC's net worth, and get SEBI's nod. Only then does the fund open.
Practice
🔥 0 streakReal exam format. Answer by voice, tap, or press 1 to 4. No negative marking, so always attempt.
Who is the sponsor of a mutual fund?
A sponsor must show a sound track record of at least how many years?
A sponsor must contribute at least what share of the AMC's net worth?
Which of these is a sponsor eligibility condition?
An AMC that runs without a traditional sponsor is called:
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Education for the exam, not financial advice. Answers can be wrong, so confirm figures against the workbook.