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Mutual Fund Units Dematerialisation

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Mutual fund investors usually have lot of plans from different fund houses such as equity funds and debt funds. It is also from different fund houses.  If all are from one fund house them your work is easy. Otherwise keeping track of all these investments and fund houses are not an easy job. Internet is there to help you. We all use online facilities to most of our day to day works. All fund houses have their own websites and online facilities to help their valued customers.

mutual funds india 300x237 Mutual Fund Units Dematerialisation

If we get to see all our account together then it will be a great thing. It can be possible if you dematerialise your fund units and transfer them to your demat account. When you first hear about it, you feel it something difficult and complicated, but don’t worry, it is very easy. May be first time you face little problem but otherwise it is well organized as per your need. You need to fill up a conversion request form and submit it to the depository participant, with the statement of account.  The depository participant will verify it and forward it to the fund houses.

After checking the information, the fund house will credit your holdings to the demat account.  There is no extra cost for this service. Once it is done then you can have a consolidated view of all your holdings at one place. Now you don’t have to go to multiple accounts of different fund houses.   It is applicable for nominee details also, so it is better to keep the same nominee for all investments. If you want to keep different nominee, then it will cost you extra around Rs.300/- to Rs.500/- a year and also need to open a trading account with a brokerage house. If we talk about transaction charges, at present, there are no charges applicable but you have to make sure about it with the broker. Whenever a security moves out of your demat account, the DP levies a fixed charge of Rs.20/- per transaction.

Demat transaction charges are applicable while selling mutual funds. If you sell funds for Rs.10, 000 from five different schemes, you have to pay Rs.100/-. If you feel that all these are all wastage of money then it is fine, but if you look for the easiness of handling accounts, you have to spend some extra bucks.

Apart from making transactions, you can also buy and sell mutual funds like stocks.  Through the stock exchange, you can place a buy order after mentioning the purchase amount and mutual fund schemes.  The unit will automatically credited to your demat account.

For redemption purpose, you can contact the broker or the DP.  Doing it through the broker, investors can place redemption order with the broker.  The sales proceeds will be credited to your bank account by the fund house. Doing it through DP, submit the redemption form directly to the DP.  The money will be credited to your bank account after verified by the transfer agent.  While we talk about all the advantages we should also look for the drawbacks. The major drawback of this demat account is all the brokers don’t offer trading in mutual funds because they do not offer all mutual fund schemes.

Investors should cross check the benefits and drawbacks of demat account before going for it. Fund houses will advise you to take the demat account as it will reduce the operational cost of them. They can save money in different ways because of it such as generating account statements and postage charges. So think before you go for it.