Is there a better mode to hold your mutual fund investments?

• Are you approaching your long-term goal and planning to use SWP (systematic withdrawal plan) to protect your hard-earned corpus from short-term market volatility?
  
• Do you have a large amount of cash and are planning to use STP (systematic transfer plan) to effectively spread your investment over some time?
  
• Do you wish you could appoint separate nominees for separate funds?

If you answered 'yes' to any of these questions, it's time you check how you store your mutual fund investments. If your fund investments are in demat mode, consider switching to Statement of Account (SoA), as it offers several benefits such as SWP, STP and multiple nomination options. What's more, SoA doesn't levy additional charges associated with the demat method.

We at Value Research also feel the SoA form is a better option. So, let's check how you can check the mode of mutual fund holding and, if needed, make the transition.

How to check your mutual fund account

Not many investors are aware if their funds are stored in demat or SoA mode. But don't worry; you can check where your investments are held by downloading your Consolidated Account Statement (CAS) from authorised portals like mfcentral.com, nsdl.com, or camsonline.com.

How to switch from demat to SoA

1. Start by contacting your DP (Depository Participant), the entity managing your demat account. You'll need to fill out a Rematerialisation Request Form (RRF) for each mutual fund you wish to rematerialise. The form will require details like your Beneficiary Owner (BO) ID, the name of the holders, and the number of units you wish to rematerialise.

Check below to see Zerodha's RRF.

2. You'll need to attach self-attested copies of your address proof and PAN card.

3. Your DP will verify the details in your form and send it to the asset management company (AMC) or the Registrar and Transfer Agent (RTA). Upon successful verification, the RTA or AMC will transfer your investments to SOA.

Five points to remember before switching

1. You need to STOP your SIP if you intend to switch.

2. Mutual fund units pledged as collateral for a loan cannot be converted.

3. You must transfer all your mutual fund units into SoA; partial conversions are not allowed. For example, if you own 100 units, you cannot choose to switch just 70-80 units.

4. Your DP may charge fees for processing your request. The charges may vary depending on your DP. For example, Zerodha charges the following:

5. This entire process may take up to 30 days, as per NSDL, a Mumbai-based depository that stores securities in a digital format.

Also read: Mutual funds in demats be damned

This article was originally published on August 21, 2024.