Investor Service FAQs

Much like a bank account number, a Folio number is your Account Number in a Mutual Fund Scheme, under which yours Unit holdings in a mutual fund scheme are recorded in the Unit Holders’ Register.

Most Mutual Funds allot a Master Folio number, so that Unit holdings of a unit holder (or same set of unit holders, in case of joint holders) are shown under a common folio number thereby avoiding the need to remember multiple folio numbers.

As the name suggests, it is a statement that reflects your holding in a scheme. A statement of accounts is like a bank pass book.

An account statement will reflect the following

• The scheme in which you have invested.
• The amount you've invested, the purchase price and the units you were allotted.
• Other details like Bank details, mailing and contact details, nominee details etc.

The Mutual Funds issue a Consolidated Account Statement (CAS) across all fund houses once a month. However, one may request for an account statement with each fund house that will solely reflect the holdings in the schemes managed by that particular fund house. There may be charges levied for issue of a duplicate account statement.

Mutual funds are required to issue statements of accounts within five working days from the date of closure of the initial subscription of the scheme. In case of close-ended schemes, the investors would get either a demat account statement as these are traded in the stock exchanges. In case of open-ended schemes, a statement of account is issued by the mutual fund within five working days from the date of closure of initial public offer of the scheme and/or from the date of receipt of the request from the unitholders. The procedure of repurchase is mentioned in the offer document.

Also, AMCs are required to send confirmation specifying the number of units allotted to the applicant by way of email and/or SMS’s to the applicant’s registered email address and/or mobile number as soon as possible but not later than five working days from the date of closure of the initial subscription list and/or from the date of receipt of the request from the unitholders.

The Cut-off timing is the time before which an investor has to submit a valid purchase or withdrawal/ redemption form to be eligible for a particular day's price or Net Asset Value (NAV).

The performance of a particular scheme of a mutual fund is denoted by Net Asset Value (NAV). In simple words, NAV is the market value of the securities held by the scheme.

Mutual funds invest the money collected from investors in securities markets. Since market value of securities changes every day, NAV of a scheme also varies on day to day basis.

The NAV per unit is the market value of securities of a scheme divided by the total number of units of the scheme on any particular date.

For example, if the market value of securities of a mutual fund scheme is INR 200 lakh and the mutual fund has issued 10 lakh units of INR 10 each to the investors, then the NAV per unit of the fund is INR 20 (i.e.200 lakh/10 lakh). NAV is required to be disclosed by the mutual funds on a daily basis. The NAV per unit of all mutual fund schemes have to be updated on AMFIís website and the Mutual Funds’ website by 9 p.m. of the same day. Fund of Funds are allowed time till 10 a.m. the following business day to update the information.

Unlike stocks (where the price is driven by the market and changes from minute-to-minute) , mutual funds don't declare NAVs through the day.

Instead, NAVs of all mutual fund schemes are declared at the end of the trading day after markets are closed, in accordance with SEBI Mutual Fund Regulations.  Further, as per SEBI Mutual Fund Regulations, for all mutual fund schemes, other than liquid fund schemes, the mutual fund Units are allotted only at prospective NAV, i.e., the NAV that would be declared at the end of the day, based on the closing market value of the securities held in the respective schemes.

Thus, what is important here is the cut-off time for submission/receipt of the transaction – If you invest before the cut-off time, you will get the end-of-day NAV of that particular business day. The cut off time for purchase transactions for all mutual fund schemes other than liquid fund schemes is 3:00 p.m. This means that if you have invested till 3:00 p.m. on a particular day, you will get that day's NAV.

A mutual fund may accept applications even after the cut-off time,  but you will get the NAV of the next business day. Further, the cut-off time rules apply for redemptions too. 

As per SEBI circular no. SEBI/HO/IMD/DF2/CIR/P/2020/175 dated September 17, 2020 read with circular no. SEBI/HO/IMD/DF2/CIR/P/2020/253 dated December 31, 2020, effective from February 1, 2021, the applicable NAV in respect of purchase of units of mutual fund scheme shall be subject to realization & availability of the funds in the bank account of mutual fund before the applicable cut off timings for purchase transactions, irrespective of the amount of investment, under ALL mutual fund schemes.

- Subscription

• Where the application is received up to 1.30 p.m. on a day and funds are available for utilization before 1.30 p.m. without availing any credit facility, the closing NAV of the day immediately preceding the day of receipt of application.
• Where the application is received after 1.30 p.m. on a day and funds are available for utilization on the same day without availing any credit facility, the closing NAV of the day immediately preceding the next business day; and
• Irrespective of the time of receipt of application (before or after 1.30 p.m. on a day), where the funds are not available for utilization before 1.30 p.m. without availing any credit facility, the closing NAV of the day immediately preceding the day on which the funds are available for utilization.

- Redemption

• Where the application is received up to 3.00 pm – the closing NAV of day immediately preceding the next business day; and
• Where the application is received after 3.00 pm – the closing NAV of the next business day./li>

a. Subscription

• Where the application is received up to 3:00 p.m. and funds are available for utilization before 3:00 p.m., closing NAV of the day on which the application is received.
• Where the application is received after 3:00 p.m. and funds are available for utilization, closing NAV of the next business day.
• Irrespective of the time of receipt of application (before or after 3:00 p.m.), where the funds are not available for utilization, closing NAV of the day on which the funds are available for utilization.

b. Redemption

• Where the application is received up to 3.00 pm – closing NAV of the day on which the application is received; and
• Where the application is received after 3.00 pm – closing NAV of the next business day.

All mutual funds publish their scheme NAVs on their respective web sites.

In addition, one can also access the NAVs of all mutual funds on the web site of Association of Mutual Funds in India (AMFI) at www.amfiindia.com.

Mutual funds are market linked investments. They invest in either Equity, Bond or Gold markets and these markets have fixed open and closing hours for trading. The NAV of a scheme is based market value of the underlying portfolio and thus highly correlated with the market prices. So in order to be eligible for a particular days' NAV, the fund manager needs to be aware of the amount that needs to be purchased or sold as per the settlement period and trading times of the markets. The timings also largely help in ensuring that all classes of investors get the same treatment irrespective of their quantum of investing.

The price or NAV a unit holder is charged while investing in a mutual fund scheme is called sales price.

Repurchase or redemption price is the price or NAV at which a mutual fund repurchases (buys back) / redeems its units from the unitholders. It may include exit load, if applicable.

Expense ratio represents the annual fund operating expenses of a scheme, expressed as a percentage of the fund’s daily net assets. Operating expenses of a scheme are administration, management, advertising related expenses, etc.

An expense ratio of 1% per annum means that each year 1% of the fund’s total assets will be used to cover expenses. Information on expense ratio that may be applicable to a scheme is mentioned in the offer document. Currently, in India, the expense ratio is fungible, i.e., there is no limit on any particular type of allowed expense as long as the total expense ratio is within the prescribed limit. For limits on expense ratio, refer to regulation 52 of the SEBI (Mutual Funds) Regulations, 1996.

As per SEBI mutual Fund Regulations, no entry load can be charged for any mutual fund scheme. An investor may choose to pay fees to a distributor based on the investor’s assessment of various factors including the service rendered by the distributor. However, for investments made through a distributor, commission is paid directly by AMC to the distributor within the limits on expense ratio specified under regulation 52 of the SEBI (Mutual Funds) Regulations, 1996. Hence, the cost borne by investors remains within the limit prescribed under SEBI Regulations.

Transaction Charges:
Mutual Fund Distributors are permitted to recover transaction charges of ₹150 from a new investor and ₹100 per subscription transaction of ₹10,000 from an existing investor.

This transaction charge can be levied only if a distributor has opted in to levy transaction charge for that type of mutual fund scheme. Further, the transaction charge, if any, are deducted by the mutual fund from the subscription amount and passed on to the distributor and the balance amount is invested.

From October 1, 2016, the monthly Consolidated Account Statement (CAS) issued to investors is required to provide information in terms of total purchase value/cost of investment in each scheme. Further, CAS issued for the half-year (ended September/March) shall also provide the amount of actual commission paid by AMCs/Mutual Funds to distributors (in absolute terms) during the half-year period against the concerned investor’s total investments in each Mutual Fund scheme.

The term ‘commission’ here refers to all direct monetary payments and other payments made in the form of gifts/rewards, trips, event sponsorships etc. by AMCs/MFs to distributors. The commission disclosed in the HY-CAS is the gross commission and does not exclude costs incurred by distributors such as service tax (wherever applicable, as per existing rates), operating expenses, etc.

ASBA is an acronym for application supported by blocked amounts and is a facility provided by banks to investors in New Fund Offers (NFOs) of mutual funds. If you apply for Units via ASBA during NFO, your application amount is blocked in your bank account and debited only upon allotment of Units. In other words, the amount blocked remains in your bank account till allotment, but it cannot be used until allotment is completed.

For more information, refer to FAQs on ASBA available on SEBI website at http://www.sebi.gov.in/cms/sebi_data/commondocs/asbaprocess1_p.pdf.

One may invest in mutual funds with the help of a financial intermediary i.e., a Mutual Fund distributor/agent in a Regular Plan OR choose to INVEST DIRECTLY i.e., without involving or routing the investment through any distributor/agent in a ‘Direct Plan’.

'Direct Plan' and 'Regular Plan’ are both part of the same mutual fund scheme, have the same / common portfolio and are managed by the same fund manager, but have different expense ratios (recurring expenses that is incurred by the mutual fund scheme). Direct Plan has lower expense ratio than the Regular Plan, as there is no distributor/agent involved, and hence there is saving in terms of distribution cost/commissions paid out to the distributor/agent, which is added back to the returns of the scheme. Hence, a Direct Plan has a separate NAV, which is higher than the normal “Regular” Plan’s NAV.

To know more about Direct Plan, click here

Yes, cash investments up to ₹50,000 per investor, per mutual fund, per financial year are permitted. However, the repurchase or dividend payment is not made in cash, but paid by cheque / draft or direct credit to investor’s bank account via NEFT/RTGS etc.

Yes, non-resident Indians can invest in mutual funds in India. Please refer to the respective mutual fund’s offer documents for details.

The 1st holder in the mutual fund folio should be one of the joint holders in the registered bank account (though not necessarily be the primary holder in the bank account). In other words, the payment made from the bank account of the 2nd or 3rd holder in the MF folio is acceptable, only if the 1st holder in the MF folio is also one of the joint holders in the bank account; not otherwise.

As per extant regulations, AMCs/RTAs are required to validate the bank accounts of the MF investors, which is typically done through “penny drop” mechanism via Immediate Payment Service (IMPS).
However, currently validation of bank account via IMPS is possible only in respect of the First Holder in the bank account. i.e., validation of the bank account through IMPS is not possible if the first holder in MF folio is the 2nd or 3rd holder in the bank account. Hence, in such cases, the MF investor will have to provide an alternate documentary proof such a cancelled cheque leaf /copy of bank passbook or bank statement etc., to enable the AMC to verify the correctness of the bank account.

As per recent SEBI circular SEBI/HO/IMD/IMD-I DOF2/P/CIR/2022/1 dated November 25, 2022, SEBI has revised Timelines for transfer of redemption proceeds to unitholders . Accordingly, the transfer of redemption or repurchase proceeds to the unitholders shall be made within three working days from the date of redemption or repurchase.

For schemes investing atleast 80% of total assets in permissible overseas investments (Vide SEBI Circular SEBI/IMD/CIR No.7/104753/07 dated September 26, 2007, a list of permissible investments was prescribed for the purpose of overseas investments), the transfer of redemption or repurchase proceeds to the unitholders shall be made within five working days from the date of redemption or repurchase.

In case of failure to dispatch the redemption/repurchase proceeds within 3 working days or 5 working days as the case may be, the AMC is liable to pay interest @15% for the period of delay beyond 3 or 5 working days.

For list of exceptional situations and additional timelines for redemption payment - Click here

All Mutual Funds provide, the list of names and addresses of investors in whose folios there are unclaimed amounts (dividend/redemption) on their websites. The website of Mutual Funds is also provide information on the process of claiming the unclaimed amount and the necessary forms/documents required for the same.

The information on unclaimed amount along with its prevailing value (based on income earned on deployment of such unclaimed amount) is separately disclosed to investors through the periodic statement of accounts/CAS sent to the investors.

Yes. All Mutual Funds provide a nomination facility to individual investors.
For more information regarding, please refer to the section titled “Nomination” .

In case of winding up of a scheme, the mutual funds refund to the unitholders whose names appear in the Unit Holders’ Register value of their outstanding Units at prevailing NAV, after adjustment of all expenses. Unitholders are entitled to receive a report on winding up from the mutual fund which gives all necessary details.

The name of the Investor Relations Officer / contact person is mentioned in the Scheme Information Document (SID) of the mutual fund scheme, and also on the website of the concerned mutual fund, whom one may approach / write to in case of any query, complaints or grievance.

Investors should approach the concerned Mutual Fund / Investor Service Centre of the Mutual Fund in case of any complaint. If the complaint remains unresolved, the investor may approach SEBI by logging their complaint on SEBI’s complaints redressal system. Please log on to the section titled ‘SCORES” for more information.

‘Units’ of mutual funds are ‘securities’ within the meaning of securities as defined under Securities Contract Regulation Act. 

As per law, addition of a 2nd name / 3rd name in an existing mutual fund folio / account constitutes a ‘transfer’ of assets, requiring payment of stamp duty etc.

To overcome the above legal hassle and to enable clients to transfer the units freely, as mandated by SEBI , all mutual funds have provided a facility to the clients to hold units in demat mode.  Each mutual fund scheme has a separate / distinct ISIN, as mandated by SEBI, so as to facilitate dematerialization of units easily.

In other words, units held in demat mode are freely transferable via Stock exchanges in case of listed schemes / ETFs and via off-market transaction, in case of unlisted schemes.  This facility is not available in respect of units held under physical statements.  In other words, an investor who wishes to add a name/ joint holder in an existing mutual fund folio / account may do so by transferring the units held in demat mode, from the demat account of the sole holder to the desired demat account held in multiple names through an off-market transaction.

Mutual Fund units cannot be transferred through a Gift Deed.

The person desirous of gifting the units may either bequeath the units to the person whom she/he wishes to gift through a Will or transfer the units through De-mat mode via an off-market transaction in the transferee’s De-mat account.  For the latter mode, the units must be held in Dmat mode only.  If the units are held in physical mode, then the same will first need to be dematerialized and then transferred through off-market mode as stated above.

Total return index (TRI) is an index that measures the performance of a group of components (say, equities or debt instruments) by assuming that all cash distributions are reinvested, in addition to tracking the components’ price movements. In other words, it measures performance, reflecting the actual rate of return of an investment or a pool of investments over a given period. And it includes interest, capital gains, dividends and distributions realised over a given period of time from such pool of investments. Globally, TRI is viewed as a strong measure to reflect the actual out-performance over benchmark returns by a mutual fund scheme.

Please click here MF Awareness Booklet