Saturday, October 10, 2020

Rights and Duties of Mutual Fund Investor

 A friend of mine bought a car, with that he got right to use his car, at the same time, he bought insurance for the same as he knew, it is his added responsibility with right to use the new car

When one of my client fixed up marriage for his son, immediately he called up interior designer, to renovate his house, and ensure private and new space for the to be couple.

With every right, comes responsibility.

As a mutual fund investor, their are certain rights which I believe one needs to be aware of, at the same time as a responsible investor ,certain duties also needs to be followed in the interest of self smoother wealth creation journey

 I would be addressing both together, as Rights and within that, relative responsibility and duty to make it easy for investor to understand, connect & follow

RIGHTS & DUTIES OF Mutual Fund Investor-

A-    Assess documents

Right to assess scheme related documents like

Scheme Information Document (SID),

Statement of Additional Information(SAI),

Key Information Memorandum(KIM),

Fund Fact sheets

and Addendums ,

Annual reports etc

It is duty & responsibility of every investor to go through the documents available, understand, ask questions, research, analyze and find suitable mutual fund scheme with be-fitting risk-o-meter, matching your own risk profile and ensure objective of the scheme, matches needs

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No alt text provided for this image

B-    Right to know Fees, commissions and expenses

Expense ratio reflects many aspects, like cost of regular funds which is paid as distributor commission, once one chooses to work thru' a mutual fund distributor and other fund management charges, which has a direct impact on returns from the funds, and hence, while it is right of every investor to know the fees, expense ratio , it is also duty of every investor to read, and understand the value the mutual fund distributor brings, by choosing regular funds. This also empowers the investor to choose between investing thru' distributor or thru' direct schemes. With this fees/commission paid by the scheme to the distributor, one may also be able to judge, if the scheme is just pushed for commission only or is it rightly suggested with suitability test.SO it becomes investors responsibility to ask and ensure , if the scheme suggested is suitable and need to know what process the distributor follows to understand suitability

C-     Right to receive dividends

Every investor has right to receive dividend once declared within 30 days. At the same time, it is investors duty to inform and keep updated KYC, including address and banking details to ensure, such transfers to come on time

D-    Updates

Right to receive scheme related, Fund house related, as well as Investment related updates- again this is advisor and investors job to remain informed and do necessary changes if it does not fit at the same time it is investors duty as well, to keep the Mutual Fund house to keep updated contact details, KYC and banking details and keep reading the updates

E-     Right to have a Complaint redressal system

Every Mutual fund house, needs to ensure there is a dedicated Grievance redressal officer and mechanism and the contact details are updated on the website. To know more on how and what of complains, click here - Mutual Fund Complains- how and whom ?

At the same time, it is expected that with all the information available the investor will ensure suitability and keep track of the updated information and make changes if and whenever necessary

Happy Investing

Peaceful Investing

Happy wealth generating journey

Happy money making work for you.......


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