Mutual Fund Custodian

AAA

DEFINITION of 'Mutual Fund Custodian'

A trust company, bank or similar financial institution responsible for holding and safeguarding the securities owned within a mutual fund. A mutual fund's custodian may also act as the mutual fund's transfer agent, maintaining records of shareholder transactions and balances.

Also referred to as a "mutual fund corporation".

INVESTOPEDIA EXPLAINS 'Mutual Fund Custodian'

Since a mutual fund is essentially a large pool of funds from many different investors, it requires a third-party custodian to hold and safeguard the securities that are mutually owned by all the fund's investors. This structure mitigates the risk of dishonest activity by separating the fund managers from the physical securities and investor records.

VIDEO

RELATED TERMS
  1. Fund Supermarkets

    An investment firm or brokerage that offers investors a wide ...
  2. Mutual Fund

    An investment vehicle that is made up of a pool of funds collected ...
  3. No-Load Fund

    A mutual fund in which shares are sold without a commission or ...
  4. Transfer Agent

    A trust company, bank or similar financial institution assigned ...
  5. Pooled Funds

    Funds from many individual investors that are aggregated for ...
  6. Balanced Fund

    A fund that combines a stock component, a bond component and, ...
Related Articles
  1. Mutual Funds & ETFs

    4 Strategies For Managing A Portfolio ...

  2. Mutual Funds & ETFs

    5 Ways To Measure Mutual Fund Risk

  3. Personal Finance

    Mutual Funds: Brand Names Vs. House ...

  4. Mutual Funds & ETFs

    Mutual Fund Basics Tutorial

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center