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MUTUAL fund investors often face a lot of problems related to record-keeping and tracking investments.
When it comes being aware of the details about investments, often, the investor does not know the latest position of his investments.
This happens because investors do not get regular updates, so they are not able to act with full confidence.
Now, with a view to ensure that this problem is addressed, there are new guidelines for mutual funds that would help investors.
Consolidated account statement (CAS): All investments in a mutual fund will be reflected in the account statement issued by the mutual fund house.
The consolidated statement lists all the required information on investments in the mutual fund.
The statement includes the amount invested, number of units held and the net asset value (NAV) at which the investment was made, to name a few. The statement also has the folio number of the investor, along with the address and details about the know your customer (KYC) requirements and PAN card information.
With an increase in the number of investments, there is duplication of effort, if there are separate account statements given for each investment. A CAS, which is provided by the mutual fund, reflects all the holdings within that particular fund. It, thus, enables the investor to have an overview of multiple investments that are covered by the CAS.
Monthly CAS: An important thing that the investor will experience is that they will now get a monthly CAS, whenever there is a transaction in the mutual fund. The mutual fund has the responsibility to ensure that the CAS is generated at the end of each month and sent to the investor.
This will enable the investor to get a complete view of the position of investments and the manner in which they are performing and then help him take some further action, if required, in time.
Earlier, mutual funds used to provide an account statement on a quarterly basis, whenever there was a transaction but, now, these statements will be sent more frequently so that the investor is also able to track his investments. In addition, after every transaction, the investor will have to be intimated about the basic details of the investment by email or SMS within five working days.
Additional measurers: Mutual funds usually do not give any account statement to the investor when there are no transactions during the year. In such a situation, the investor has no clue about his investments.
Now, several mutual funds are also saying that they will provide such an account statement on a half-yearly basis ending September and March. This is a positive step, so that even when
there are no transactions, the investor can keep track of his investments after a short period of time.
Electronic communication: The most vital part of the entire system is that there will be extensive reliance on electronic communication, so, even though, it might seem that there is a higher compliance requirement for the mutual fund, this requirement might actually be more cost and time-effective over the long run.
The individual investor can ensure that the communication is received quickly and efficiently by providing an email address to the mutual fund. This will enable investors to get all the information quickly and in a timely manner
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