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Are You Organised While Holding Mutual Funds? - Outside View by PersonalFN
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Are You Organised While Holding Mutual Funds?
Mar 30, 2015

Very often convinced by the narrative from mutual fund distributors / agents / relationship managers many of you buy into various mutual fund schemes. But while you do so; are you being organised in your approach?

It has been observed that host of naive investors hold multiple folios while they invest in mutual funds. This often adds up to the muddle, as creation of multiple folios makes it difficult to keep records of investments done and simply adds up to the paper work. Just as you may be organised in your approach in your banking transaction, you need to be organised while holding mutual funds as well.

So here are couple of points which can help you be a little more organised...

  • Well, in the first place you shouldn't be creating separate folios at all. So for example, when you are investing in same tax saving fund every year or for that matter even any other type of mutual fund scheme from the same fund house, you shouldn't be creating a separate folio every time. On the contrary, you should always quote the same folio each time you invest in the same fund. It can make things simple for you. After all we don't like maintaining volumes of records unnecessarily, isn't it?

  • In case you holding multiple folios, you may opt to consolidate your folios by following the procedure. This can be done provided that holding pattern, mode of holding, address, tax status and nominee details are same across all folios. For instance, if you hold a fund only in your name; you can't merge the folio with the one held by you jointly with your spouse. Moreover, folios where you are the first holder and your spouse is second holder can't be merged with a folio where your spouse is the first holder and you are the second holder. Similarly, if you have appointed two different persons as nominee for two different funds of the same fund house; you can't consolidate such investments under one folio. Once you identify similar folios, you need to fill in folio consolidation form provided by the Asset Management Company (AMC). The form consists of basic information such as name of all unit holders, contact details, PAN Numbers and email address. You need to mention all folio numbers you want to consolidate along with the one under which all folios will be merged. The folio in which other folios are merged is commonly called a target folio. It should be from within folios you hold with an AMC. It should be noted that folios where there is a lien or pledge cannot be merged as it requires the consent of the financer.
PersonalFN is of the view that, if you have not yet opted for consolidated folios, you may consider doing it now. It makes it easy to keep a track of your investments. Periodic review of your portfolio is important as it helps you assess the performance of your investments. PersonalFN also believes that you should quote the same bank account number for simplicity purpose. Nominee should ideally be younger than you and could be the same across all investments, if possible. Such a practice would not only help you consolidate most of your folios but would also help you manage your investments better. Remember, it is vital for you as investors to be responsible and cognisant about your investment in mutual fund schemes.

PersonalFN is a Mumbai based personal finance firm offering Financial Planning and Mutual Fund Research services.


The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.

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