mutual fund custodian

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".

Notes:

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.

See also: Balanced Fund, Front-End Load, Fund Manager, Mutual Fund, Net Asset Value - NAV, No-Load Fund, Open-End Fund, Transfer Agent

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Mutual fund custodian

A commercial bank or trust company that holds securities owned by a mutual fund and sometimes acts as transfer agent for the mutual fund.

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mutual fund custodian

An organization that holds in custody the securities owned by a mutual fund. See also custodian.