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 Commentary
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.
Related Links
Mutual Fund Basics Tutorial
Managing a Portfolio of Mutual Funds
A Statistical View of Mutual Funds
See also: Balanced Fund, Front-End Load, Fund Manager, Mutual Fund, Net Asset Value - NAV, No-Load Fund, Open-End Fund, Transfer Agent
Also spelled: mutual fund corporation
mutual fund custodian