Posted by
Subbu's Solution on
Monday, February 15, 2010
1. At present I'm investing in mutual funds by paying directly where there is no charge of entry load. The full amount is invested in the market. I do not want to go for online & pay brokerage. Will this continue or will transactions only through online be made compulsory? - Sri
Dear Sri,
You can continue to invest in the same way as you are doing now. You have the choice to choose between the following options:
2. For many years now, we have had a 3-in 1 (bank, trading and demat) account with ICICI direct where we have purchased shares and MF units. Does the new arrangement mean anything different for us? - Prakash Shesh
Dear Prakash
Previously when you transacted through ICICI Direct or any other stock brokers online mutual fund section, you were buying units in the physical form, and you got a statement from each mutual fund. The new platform from NSE and BSE credits these units directly to your demat account, and you can have one common account for all your mutual fund investments.
Also, ICICI Direct and other stock brokers would earlier have the schemes of only those fund houses who had empanelled them to distribute their funds. Now, you have access to all the schemes that have registered with the stock exchanges without any formalities with the broker, thus providing you a wider view at the various schemes available for investing.
To cite an example: Quantum Mutual Fund schemes were not available on ICICI Direct’s Mutual Fund section. But with the NSE MFSS and BSE StAR MF our funds are by default available to all the brokers who have enabled these platforms.
You can continue with your existing arrangement. Earlier you could not use the broking platform to route your transactions, now you can.
3. How can one convert existing investment in paper format to demat format so one can trade (Buy/Sell)? What are the charges for same? Is it the same as brokerage charges or does every platform has its own? Platforms like HDFC Sec. are insisting on a NOC letter from previous agent/broker. Is this correct? - Bipin Shah
Dear Bipin
To understand the dematerialisation process of physical units, please refer to Q1: http://www.quantumamc.com/equitydirect/qltefscheme/10-02-01/Subbu’s_Solutions.aspx
Charges for converting into demat is charged by the Depository Participant and will vary from one to another.
As per SEBI’s circular - SEBI/IMD/CIR No./ 13/187052 /2009 dated December 11, 2009 it is not mandatory for an investor to obtain NOC from previous distributor to invest in mutual fund through some other distributor or broker. Please read the circular: http://www.sebi.gov.in/circulars/2009/cir1309.pdf
4. What constitutes equity oriented mutual fund or in other words what should be the minimum equity component to call it as equity oriented?
The fund’s portfolio should have a minimum of 65% exposure to equities to qualify as an equity oriented mutual fund.
5. How should one plan his investment in Mutual Funds so that there is enough hedging from risk?
To hedge against risk:
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Disclaimer: The responses mentioned here are strictly for illustration purposes, and are not to be considered or implemented as recommendations.