Understand your right and duties as an MF investor

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As mutual fund investors, your aim should not only be to earn long term capital appreciation. There are certain rights entitled to all mutual fund investors by market regulator SEBI (Securities and Exchange Board of India). Mutual fund houses and Asset Management Companies are obliged to bestow these rights to all their investors. Below mentioned are some of the rights to which all retail mutual fund investors are entitled:

Scheme Information Document (SID)

Scheme Information Document or SID is the most important piece of document that is supposed to entail all the necessary details of a particular mutual fund scheme. All mutual fund schemes have a SID which is easily available on AMC’s website. SID of a mutual fund scheme is its bible, it has all the facts, including the investment objective of the scheme, eligibility for investing, the different plans in which the scheme is available, the minimum investment sum for starting an investment in that particular mutual fund scheme, all the different types of risks associated with that particular scheme, etc. Another piece of information provided by the AMC is KIM (Key Information Memorandum). KIM contains other information like past performance which is not provided in SID along with other valuable info. In case the AMC makes any changes in the mutual fund scheme, they must make the investor aware of the same.

Commission fees (if applicable)

If you invest in a mutual fund scheme directly through a fund house, you may not have to pay any commission fee. However, when investing in mutual funds through a third party aggregator or a mutual fund agent/broker the investor might be charged some extra fees. That’s because the aggregator charges a commission fee to the AMC for selling the scheme on their behalf and this fee is recovered by the AMC through the investor himself/herself. The commission fee is generally levied on mutual fund regular plans. A mutual fund direct plan always has a low expense ratio as compared to the regular plan. Mutual fund investors are entitled to all the information related to the expense ratio of various plans as well as commission fees (if applicable).

Investment related updates

Suppose you are investing in a mutual fund scheme via SIP. You are investing a fixed amount every month on a fixed date. If you are doing so, the AMC has the responsibility of reaching out to you to confirm your investments in the mutual fund scheme within 5 days from the date of investment. The AMC must inform you how many units you have purchased through your SIP investments after your monthly investment over email and SMS. Investors must also receive a consolidated account statement (CAS) that will contain information on all your mutual fund investments made across various AMCs. For those who aren’t regular with their mutual fund investments, such individuals will receive CAS once every six months.

Redemption and dividend details

As much as it is important to regularly invest, it is also important to make sure that you redeem your investments whenever in need of money. After all, we invest religiously so that we can reap the fruits in the future. If and when you redeem your mutual fund units, you should receive the sum equivalent in your linked savings account within 10 days from the date of redemption. If the AMC delays sending you the redemption amount within 10 days you are entitled to a 15% annual interest for the period of delay.