SEBI has recently allowed registered stockbrokers to transact mutual fund units on behalf of their clients through the stock exchange mechanism. When the systems are in place there are a few points the investor has to reckon about while investing in mutual currency through Stock Exchanges (NSE & BSE) – Existing mutual fund investors who intend to buy more units will also benefit as this system will permit them to keep track of all investments under a single statement. – End-users can use the convenience of their neighboring broker’s office for their mutual fund transactions.
- The SEBI circular on Friday also said that investors can hold units of mutual fund schemes in dematerialized form, and that the Demat statement given by the depository participants would be deemed adequate compliance with SEBI norms.
Purchasing and selling will become more efficient and transparent, if investors select to transact through a Demat account. Though cost seems to be a factor for those who do not have a Demat account, the impact will be minimal for those who already are Demat account holders.
- End-users can use the convenience of their neighboring broker’s office for their mutual fund transactions.
- In terms of convenience, the advantages are similar to investing online through the AMC’s net site – reducing the clutter of paperwork & fast execution.
- Investing in SIPs (systematic investment plans) – A reading of the SEBI circular on entry lots suggests that the entry load will continue to apply on installments of SIPs registered before August 2009.
The only way out is to cease the existing SIPs and start afresh in the same process. For those with SIPs, the only way to benefit from the entry load waiver is to cease them and start new ones in the same process.
- Investing in SIPs (systematic investment plans) – A reading of the SEBI circular on entry loads suggests that the entry load will continue to apply on installments of SIPs registered before August 2009. As long as this loophole remains unplugged, existing SIPs will be at a disadvantage to the ones registered after August 1.
- Switching from one scheme to another within the same fund house – As per the new guidelines, no entry load will be charged for purchases, additional purchases and switch-in accepted by any fund house with effect from August 1, 2009.Similarly, no entry load will be charged with respect to applications for registration under systematic transfer plans.
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