INVESTOR SERVICES BY MUTUAL
FUNDS
Applying and Redeeming for
Mutual Fund Units
Investment Plans and Services
IMPORTANCE OF INVESTOR
SERVICE
Besides good returns of funds…
Most important advantage of MF
is…“CONVENIENCE”
Depends upon
type of service provided
variety of service provided
PROCEDURE FOR PURCHASE OF
UNITS
Read the Offer Document
Description of the procedure for
purchase of units
acceptable mode and permissible places
of payment
Refer Key Information Memorandum
(KIM)
Application form
Salient features of schemes
‘Only KIM contains Application form and not OD’
Submission of application form to
Collection Centres
AMC offices
‘Registrars’ accept new subscriptions
and redeem from investors.
MF may own ‘Investor Service Centres’
Payment is through Cheque / Demand
Draft / Cash (in certain cases), Internet
can be used to transfer funds
FOR NRIs
RBI has given permission to all MFs to sell units
to NRIs / OCBs/ Foreign entities
Companies need to submit Board resolutions,
memorandum and articles of association with
application forms
Mode of Payment:
For repatriation benefits- DDs or cheques using FCNR
account / NRE account
Non repatriation benefits- DDs or cheques on
NRO/NRSR accounts
PROCEDURE FOR
REDEMPTION
OD contains place where redemption notice
must be sent
Investors have to deal with registrars or
Investor service centres
Payment is through cheque, ECS to bank
account
For NRIs and OCBs: ECS to to NRE or US
Dollar draft at current exchange rate
‘If investment was on repatriable basis’
Else - Rupee cheque in favour of investors
NRO, NR/SR account
INVESTMENT PLANS AND
SERVICES
Automatic Reinvestment plan:
There are two options: Dividend & Growth
ARP is also called Growth option
allows investor to reinvest in additional units
the amounts of dividends or other distributions
they do not receive dividends
Reinvestment takes place at ex-div NAV
‘Investor reaps benefit of Compounding’
Some funds allow reinvestment in other
schemes of same fund family.
Automatic Investment plan:
Invest a fixed sum periodically
Investors save in a disciplined and
phased manner
Investment mode would be direct
debit to Investor’s salary or Bank
account
‘Investor get the benefit of Rupee cost
averaging’
Voluntary Accumulation
Plan
Investor gets flexibility of the amount and frequency of
Investment
Through AIP & VAP Investment can only be in Open end
schemes
AIP is a contractual obligation of the Investor to keep
investing
Whereas in VAP Investor is not obliged to keep investing,
but has voluntary self discipline
Investment accounts are maintained for both VAP and SIP
Normally. funds which issue certificates do not have
Investment accounts
Systematic Withdrawal Plan
Allows Investor to make Periodic
withdrawals from Fund Investment accounts
Amount withdrawn is treated as redemption
of units at the applicable NAVs
They are different from MIPs, because MIPs
pay the income generated on regular basis,
without touching the capital.
Hence, Dividend Tax is not levied on SWP,
whereas it is levied for MIPs with more than
50% in debt.
Systematic Transfer
Plans
Allows investor to transfer on a periodic
basis a specified amount from one
scheme to another within same fund
family.
The redemption or investment will be at
applicable NAV
It is necessary to maintain a minimum
balance under both the schemes.
The service allows the investor to
manage his Investments actively to
achieve his objectives
OTHER INVESTOR SERVICES
Phone transactions:
Investors may telephonically redeem
or purchase units.
The telephone instructions are
possible in case of the funds that
keep investment accounts, rather
than issue certificates.
Cheque Writing Facility:
Open - End MFs allow cheque writing by
treating fund account equivalent to bank
saving account
Checks can be issued subject to
maintaining minimum balance
RBI approval is needed to start this service
Usually offered by MMFs and other liquid
schemes of short duration.
Useful for investors with large short-term
surpluses.
Periodic statements and
Tax information:
Account statement show units purchased,
redeemed or transferred between schemes,
distributions and reinvestments and investor’s
current holding in units and in amount.
‘SEBI regulations require funds to send annual
financial statements to unit holders within six
months of close of accounting year’
If a fund has deducted tax at source from
income distributed to the investors, it would
also issue TDS statement.
Loans against units:
Several banks lend to the investors
against mutual fund units held by them.
The amount is usually a percentage of
the value of the value of the Investor’s
holding in Units
‘SEBI prohibits MFs to give loans’
Nomination facility is available for
Open end Funds and Close End
Funds not listed on SE.
The benefits passes to the nominee
In case of Close Ended schemes
listed on SE same procedure as
Share transfer is followed
