{"id":1256,"date":"2019-11-07T05:08:52","date_gmt":"2019-11-07T05:08:52","guid":{"rendered":"https:\/\/blog.certifiedfinancialguardian.com\/?p=1256"},"modified":"2019-11-07T05:09:10","modified_gmt":"2019-11-07T05:09:10","slug":"is-it-best-to-hold-mutual-funds-in-a-demat-account","status":"publish","type":"post","link":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/2019\/11\/07\/is-it-best-to-hold-mutual-funds-in-a-demat-account\/","title":{"rendered":"Is it Best to Hold Mutual Funds in a Demat Account?"},"content":{"rendered":"\n

It is a common knowledge that one needs a demat account to hold shares, but did you know that you can hold your mutual fund<\/a>\u00a0units in a demat form as well?<\/p>\n\n\n\n

Mutual fund investors have the option to hold their units in statement of account (SOA) form or in a dematerialised (demat) account. In both cases, the units are held in digitised form and no physical certificates are involved.<\/p>\n\n\n\n

Is it beneficial to hold mutual fund units in demat form? Let’s find out …<\/p>\n\n\n\n

Unlike shares, holding mutual fund units in demat form is not mandatory. In case of SOA, the units are controlled by the respective asset management company (AMC)<\/a> while in a demat form, it is controlled by a depositary participant (DP) such as Central Depository Services and National Securities Depository. Units in demat form can be purchased and sold through stock exchanges, broker or through your DP.<\/p>\n\n\n\n

Having a demat account is beneficial if\/when you want to invest in exchange traded funds (ETFs) frequently because these funds can only be traded on stock exchanges.<\/p>\n\n\n\n

Transmission of units to the nominee is simpler in demat form in case of death of the unit holder. If you have units in SOA, you need to submit a transmission request to the registrar and transfer agents (RTAs) of various funds.<\/p>\n\n\n\n

[Read: <\/strong>How To Transmit Mutual Fund Investments Of Your Parents, As A Legal Heir<\/a>]<\/p>\n\n\n\n

However, there are certain drawbacks to holding mutual funds in demat form:<\/p>\n\n\n\n

If you hold units in demat form, you cannot opt for a systematic transfer plan (STP) or systematic withdrawal plan (SWP). STP and SWP can be a necessary requirement for some investors for better financial planning. However, systematic investment plan (SIP) is permitted.<\/p>\n\n\n\n

[Read:\u00a0<\/strong>STP And SWP: How Do They Work<\/a>]<\/p>\n\n\n\n

You have to pay annual maintenance charges for holding a demat account, which is usually in the range of Rs 300-700, besides transaction charges (around 0.05% per transaction). Mutual funds in SOA form allows you to transact though investor service centres of mutual funds or its RTA, or you may transact online with no annual fees.<\/p>\n\n\n\n

In case of demat account, one cannot have multiple account holders for a particular investment. This restriction can make it difficult to distribute investment amongst more than one heir.<\/p>\n\n\n\n

When it comes to the purchase and redemption of\u00a0liquid funds<\/a>\u00a0in demat form, the processing takes time as it is done at the DP’s end. If you hold\u00a0liquid funds<\/a>\u00a0with AMCs, purchasing and selling is facilitated on the same day.<\/p>\n\n\n\n

Earlier, one of the main advantages of holding a demat account was that you could view all your investments, including mutual fund, shares, bonds, etc., in a single statement. Nowadays, you can get a consolidated account statement from NSDL CAS for all your investments in securities including mutual funds, regardless of whether they are in demat form.<\/p>\n\n\n\n

In addition, CAMS issues consolidated statement of your mutual fund holdings with detailed information of each holding.<\/p>\n\n\n\n

[Read:\u00a0<\/strong>How To Read Your Mutual Fund Account Statement Correctly<\/a>]<\/p>\n\n\n\n

The benefits of holding mutual fund units in SOA form far outweigh the benefits of demat account. Thus, it would be wise to opt for SOA mode.<\/p>\n\n\n\n

If you wish to convert your mutual fund units from demat to SOA form, you will have to fill out a rematerialisation request form with your DP.<\/p>\n\n\n\n

This article first appeared on PersonalFN here.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

It is a common knowledge that one needs a demat account to hold shares, but did you know that you can hold your mutual fund\u00a0units in a demat form as well? Mutual fund investors have the option to hold their units in statement of account (SOA) form or in a dematerialised (demat) account. In both…<\/p>\n","protected":false},"author":5,"featured_media":1257,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"cybocfi_hide_featured_image":""},"categories":[3],"tags":[],"_links":{"self":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts\/1256"}],"collection":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/comments?post=1256"}],"version-history":[{"count":1,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts\/1256\/revisions"}],"predecessor-version":[{"id":1258,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts\/1256\/revisions\/1258"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/media\/1257"}],"wp:attachment":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/media?parent=1256"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/categories?post=1256"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/tags?post=1256"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}