Investments in mutual funds by investors,mutual fund products,mutual fund units,Mutual fund categoris

How can one invest in a mutual Fund?
Is there a minimum amount of units of rupees that has to be invested?
Should the investor always buy units from the mutual fund?
What are the distribution channels through which mutual fund products are distributed?
What are the categories of investors eligible to buy mutual fund units?
Is it possible for multiple owners to hold units jointly in a mutual fund?
What precautions should investors take while investing in mutual funds ?
Is there a minimum period for which an investor has to stay invested in a mutual fund ?
What should the investor do in order to repurchase the units of a scheme ?
Can investors repurchase only part of their holdings ?
Can investors use the proceeds to buy units of other scheme of the same fund or units of another fund?
What are investment plans ?
What are the limitations to the investors right ?


How can one invest in a mutual Fund?
Investors buy the units of a mutual fund. The investor can buy either fixed number of units, or can invest a fixed sum of money.

Is there a minimum amount of units of rupees that has to be invested?
All mutual funds specify the minimum amount that has to be invested and the multiples thereof. These restrictions are usually not applicable to inter-scheme and inter-option switches.

How frequently can investor buy and sell Mutual fund units?
Open Ended schemes: Investor can invest, on any given day, at the prevailing NAV. An investor can buy units of the fund, from any of the distribution agents, investor service centers and branch networks.
Closed end funds: Investors can buy units, during the offer period at the fixed price. After the issue closes investors have to buy and sell units from the stock market, as the closed ended funds are listed.

What are the distribution channels through which mutual fund products are distributed?
The regulations require that an agent selling / distributing mutual Fund products be AMFI certified and have a valid ARN number allotted. Individual advisors. Distribution companies. Banks and NBFC’ s. Direct marketing channels.



What are the categories of investors eligible to buy mutual fund units? Resident Individuals. Indian Companies.. Indian trusts and charitable institutions.. Banks.. NBFC’s. Insurance companies.... Provident funds. Non-resident Indians. OCB’s. SEBI registered FII’s.

Is it possible for multiple owners to hold units jointly in a mutual fund? Every holding in a mutual fund can have 3 joint holders. First holder is entitled to receive all information and notifications as also the dividend payments and the redemption proceeds. Nature of joint ownership: ‘Joint’ Basis- redemption has to be signed by all holders. ‘Either or survivor’- it is sufficient if one of the holders sign the redemption request.

What precautions should investors take while investing in mutual funds ? Keep a photo copy of the application form. Preserve counterfoil / acknowledgement issued by the collecting agency. It is preferable to have joint ownership. Fill up the nomination details in the application. Cheques should be crossed and application number and name should be written on the back of the cheque. Investors can quote their unique account numbers so that their holdings are consolidated.



Is there a minimum period for which an investor has to stay invested in a mutual fund ?
An open ended scheme may announce initial offer period, during which time it will only sell units. There may be no repurchases during that period. Some special fund schemes are designed to have a minimum investment period. ELSS are eligible for tax rebate, if an investor stays invested for a minimum period of 3 years.

What should the investor do in order to repurchase the units of a scheme ? Investor has to send the repurchase requisition slip duly completed and signed to the registrars and transfer agents. Repurchase requests can also be done through the internet. If the fund is closed ended the investor has to send the original certificate, discharged by signing on the reverse, to the R&T agent. Investors have to provide bank details for all repurchase requirements.

Can investors repurchase only part of their holdings ?
Yes! Subject to conditions if any, on minimum amounts to be invested. Mutual funds may stipulate the minimum lot, in which repurchases have to be made.

Can investors use the proceeds to buy units of other scheme of the same fund or units of another fund?
This is known as switching -Intra-fund switching is easy. In many cases, there are lower loads or no loads at all. Funds even provide the automatic switching option. Inter-fund switching is treated as a separate repurchase and sale.

What are investment plans ?
It refers to the services that the funds provide to investors in offering different ways to invest or reinvest. They determine the level of flexibility for the investor. Some of the investment plans offered are: Systematic Investment Plan (SIP) Systematic Withdrawal Plans (SWP) Systematic Transfer Plans (STP)

What are the limitations to the investors right ? Investors cannot sue the trust. Investors cannot lodge complaints against the trustees (with the Registrar of Public Trusts) or the AMC (with the CLB). Investors can lodge complaints with SEBI for non-compliance. Investors cannot be compensated if the performance of the fund is below expectations. There are no legal remedies for to a prospective investor. For Mutual Fund management and advisory services, click here!