Introduction to Mutual Funds

What is a mutual fund?

The law defines a mutual fund as “an inseparable group of property of several beneficiaries under the joint management of a third party”. This property belongs indivisibly to its participants depending on the number of shares they hold. Those who participate in the property of the Fund are called shareholders. Shareholders can be both natural and legal persons.

What are a fund’s assets?

The fund’s assets are the total of the assets which are invested as provided by the regulations of the fund and the institutional framework in transferable securities and cash. The assets of the fund are valued daily by the fund manager.

What are a fund’s shares?

Shares are units into which the assets of the mutual fund are divided. Each shareholder participating in the fund has in their possession a number of units proportional to the capital they has invested.

What is MFMSA (AEDAK)?

The Mutual Fund Management Societe Anonyme is a sole purpose company. By law, it must be a Societe Anonyme with registered shares whose sole purpose is the establishment and management of Mutual Funds. MFMSAs are independent units that represent the shareholders in court and out of court, while also responsible for monitoring the custodian in terms of compliance with their obligations as those are provided by the regulation of the Fund and the Institutional Framework. In order for an MFMSA to operate, its approval by the Hellenic Capital Market Commission is required.

What is a Custodian?

The Custodian keeps the assets of the Fund, performs treasury duties, co-signs the report, the prospectuses and the regulations of the Fund, and controls the legality of the actions of the administrator, ie the MFMSA.

What is the Hellenic Capital Market Commission (EC)?

The Hellenic Capital Market Commission reports to the Ministry of Finance and is an independent supervisory authority. The decisions of the Hellenic Capital Market Commission have the force of law and are implemented by the supervised companies. The Hellenic Capital Market Commission may impose sanctions and fines on companies under its supervision, if they do not comply in their daily activity with the provisions of the Institutional Framework and the Code of Ethics.

What is the Code of Ethics for Institutional Investors?

The Code of Ethics was adopted by the Association of Institutional Investors and implemented by the Hellenic Capital Market Commission. It consists of seven basic principles and is observed by all Undertakings for the Collective Investment in Transferable Securities (UCITS).

What is the Regulation of the Fund?

The Rules of Procedure of the Fund are drafted jointly by the Custodian and the Management Company. It is submitted to the Hellenic Capital Market Commission for approval and includes, among others, the name of the Fund, the type and category of securities that will constitute the assets of the Fund, its category and subcategory, the duration of the Fund, the price of the share at the date of incorporation of the Fund, terms of sale and redemption of units, financial charges for the unit holder (Administrator-Custodian Fee, commissions on the disposal and redemption of units) and others. The candidate shareholder must be aware of the regulation before proceeding with the purchase of shares of a Fund.

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