Mutual fund investors now have the option of transferring their Mutual funds in a demat account. Most people are now looking for advise regarding Mutual Funds in Demat Account Pros and Cons. So We will help you in deciding weather you need to keep them separate or in your demat account.
Table of Contents
Introduction
Mutual funds are one of the most common financial products among both professionals and newbies. Due to the good level of diversification given by mutual funds, it is come among the popular investment approaches in India.
With the launch of 3-in-1 accounts that incorporate the features of a Demat, investment, and trading account, participating in mutual funds has become even more convenient. However, let’s understand what is Demat account?
What is Demat Account?
In its most basic type a Demat account is an account that is utilized to store securities in dematerialised form.
In India, the idea was first implemented in 1996, when investors’ actual share certificates were transformed into digital form and deposited in a Demat account.
Stocks, mutual funds, bonds, exchange-traded funds, and governmental securities all can be held in the Demat account.
Is Demat Account Required for Mutual Funds?
Answer to you question is demat account necessary for mutual funds is no demat account is not required for mutual funds. However if you want to keep them in demat account you can fill out a conversion request form (CRF) accessible from the depository participant or Brokerage firm or fund house and submit it to the fund house to transfer MF units to dematerialised form.
Mention all information properly making sure there are no spelling mistakes. Details about scheme ISIN numbers can be found on NSDL or CDSL website.
Mutual Funds in Demat Account Pros and Cons
Now lets’s talk about Mutual Funds in Demat Account Pros and Cons.
Pros of keeping Mutual Funds in Demat Account
- If you have a lot of financial holdings, a combined statement is useful.
- It’s easy to keep a eye on your investments on daily basis.
- In comparison to mutual funds, where the nominee would have to submit a form to each fund house where the units were kept, the demat alternative option is much more simplistic. In case of any misfortune if you have investments in stocks, debentures, and mutual funds and want to make the transmission process simpler for your nominee in the event of your mortality than transferring the MF units to demat will be the best option.
- There are no exit loads on off-market transfers of units.
Cons of keeping Mutual Funds in Demat Account
- Demat account annual maintenance changes are an extra cost for you if you don’t have any other investment. It will cost you from 300 to 500 in normal cases.
- Due to the addition of middlemen such as a depository and a broker, the transaction for unit during buying and selling will take longer time.
- Mismatches in the names of the Demat and bank accounts may cause the withdrawal process to be delayed.
- A systematic transfer/withdrawal scheme from demat units is not practicable.
- Financial investments (demat and SoA) are presently sent to investors on a regular basis in combined pattern.
Conclusion
Looking at all the points, it appears that the keeping demat account for mutual funds only streamlines the transfer of all financial instruments upon any misfortune with the account owner.
However, If you are transferring MF to demat, please keep in mind the systematic withdrawal investment units are not allow in demat account. So keep that kind of investments separately.
This is all from our side regarding Mutual Funds in Demat Account Pros and Cons. However, if you have any doubts about mutual funds pros and cons you can just comment below.
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Advantages of demat mutual funds?
1. You can streamline your all investment together in Demat account. 2. It will be easy for your nominee to calm if any misfortune happens with you.
Can I buy direct mutual fund through demat account?
Yes, You can buy direct mutual fund through demat account without any issues.
Can we buy direct mutual funds through Zerodha?
Yes, you can buy without any problems or fee.
How to transfer mutual fund units to demat account?
You need to fill CRF form and submit it to fund house.
is it necessary to open a separate demat account to hold mutual fund units in demat form?
No, you can keep the mutual funds in the same demat account.
