Obligations Of The Investment Fund Manager Research

Mutual fund, as a pattern of collective investment, boasts a developmental history of 100 years. Mutual fund, commercial bank and insurance company together are called the three major pillars of modern financial system. It was first introduced in China in 1981, and has a promising future. But the lack of sound relevant laws and regulations, especially the lack of explicit rules regulating the legal status and obligations of the fund manager precludes further developments in China's mutual fund industry. This paper is therefore an attempt at discussing this problem.Parties involved in mutual fund operations include the fund investor, the fund beneficiary, the fund manager and the fund depository. Many countries have legislation stating that the legal relationship formed among parties concerned with a mutual fund is a type of fiduciary relationship. As for the specific legal statuses that various parties assume in this fiduciary relationship, different countries have different stipulations and viewpoints. As a matter of fact, the fund manager is at the core of a fund operation. He has a comprehensive right to manage and dispose the fund, and is also under a comprehensive obligation to the fund beneficiary to manage and dispose the fund. The realization of the fund beneficiary's interests depends on the behaviors of the fund manager. Therefore, regulations stipulating the legal status and obligations of the fund manager should be intended as a protection for the interests of the fund beneficiary.In light of China's legal environment and the reality in China's mutual fund operations, the author of this paper is of the opinion that the fund manager is the trustee of the mutual fund and is under a special type of obligation to the fund beneficiary. So considering the trustee's obligations stipulated in the law of trust, legislation in many countries imposes plentiful duties such as duty of loyalty and duty of care, etc. on the fund manager in his fulfillment of his obligations. Meanwhile, in order to bind the fund manager's behaviors andbetter protect the interests of the fund beneficiary, the law requires the fund manager be responsible for both the fund beneficiary and the fund in case of any dereliction of duty. So the fund beneficiary's right to benefit is not only a creditor's right but also a title in nature, which is precisely the peculiarity in the protection the law of trust offers to the trusts.