What Is a Fund Management Company?
Who actually manages your money in a unit trust, and the three-layer safety net that protects it.
A Fund Management Company (or Asset Manager) is the corporate entity responsible for day-to-day operations and strategic investment decisions of the fund.
They do not actually own or hold your cash. Their sole job is to deploy the pooled money into the market based on the fund's specific rules.
The Regulatory Framework in Sri Lanka
To protect everyday investors, the law enforces a strict separation of powers between three independent entities:
The Fund Manager: Operates the fund, conducts market research, and decides which assets to buy or sell. They must be strictly licensed and regulated by the Securities and Exchange Commission of Sri Lanka (SEC) under the SEC Act No. 19 of 2021.
The Trustee & Custodian: A completely independent third-party institution (typically a major commercial bank like Hatton National Bank or Deutsche Bank). Legally, the Trustee holds physical custody of your money and assets. The Fund Manager cannot withdraw or misuse your cash without the Trustee's approval, ensuring your principal is fully protected from corporate fraud or fund manager bankruptcy.
The SEC: The ultimate government regulator that monitors both the Fund Manager and the Trustee to ensure strict compliance with the law and the fund's Trust Deed.
Frequently asked questions
What is a Fund Management Company in Sri Lanka?
A Fund Management Company (or Asset Manager) is the corporate entity responsible for day-to-day operations and investment decisions of a unit trust fund. They deploy pooled investor money into the market based on the fund's rules, but do not hold custody of the assets.
Who regulates Unit Trust Funds in Sri Lanka?
Unit Trust Funds are regulated by the Securities and Exchange Commission of Sri Lanka (SEC) under the SEC Act No. 19 of 2021. Fund managers must be licensed by the SEC, and an independent Trustee holds custody of all assets.
Is my money safe in a Unit Trust Fund in Sri Lanka?
Yes. The law enforces strict separation between the Fund Manager, the Trustee (who holds your assets), and the SEC (the government regulator). The Fund Manager cannot withdraw or misuse your cash without the Trustee's approval, protecting your money from corporate fraud or bankruptcy.
This article is for educational purposes only and does not constitute investment advice. Please consult a licensed financial advisor before making investment decisions.