Investors in MF can hold units in demat

Portfolio management to be easier

“In order to facilitate investors, mutual funds should provide an option to the investors to receive allotment of MF units in their demat account while subscribing to any scheme (open ended/close ended/Interval),” Sebi said.

Sebi has asked the MF houses to ensure that such option is provided to the investors in both existing and new schemes from October 1, 2011.

Sebi said currently many MFs, in case of close-ended schemes, provide an option to hold units either in physical or demat form wherein investors money remains blocked for certain period of time.

MF schemes held in demat form is fully transferable. However, MFs in most cases in open-ended schemes do not offer any such option wherein MFs can issue and investors can redeem units any time during the tenure of the scheme.

“MFs are advised to invariably provide an option to the investors to mention demat account details in the subscription form, in case they desire to hold units in demat form,” Sebi said.

“The transferability of MF schemes becomes easier when they are held in demat form. Thus, investors would be able to better manage their portfolio,” SMC Global Securities Ltd Strategist & Head of Research Jagannadham Thunuguntla said. A demat account would help investors view his investments with different fund houses in a single snapshot and not go through several statements issued by these MFs.

The demat account would also help investors buy MF units through stock broker using the stock exchange platform following which the MFs would credit that into the demat account of the investor.