For those struggling to juggle mutual funds on their investment portfolios, life just got a little easier.
With a single demat (dematerialised securities) account for both equities and mutual funds, trading has been made considerably easier, and there is greater transparency. All this is thanks to the start of trading in mutual funds on both the National Stock Exchange and the Bombay Stock Exchange last week.
You can also track the performance of mutual fund schemes by monitoring net asset values (NAVs) through the exchanges.
The MFSS (Mutual Fund Service System) of NSE and the comparable StAR from BSE widens the reach of investors through 1,50,000 terminals of NSE across 1,500 towns and cities, while BSE backs up with 25,000 trader workstations across 359 centres. These have become new channels for mutual fund transactions, in addition to traditional routes like banks.
A buy or sell order must be placed before 3 p.m. on all trading days and the deals can be done at the NAV of the same day.
“The biggest convenience for an investor would be that of time,” said Deena Mehta, Managing Director of Asit C Mehta Investment Intermediaries Ltd. Both fund houses and individuals gain by doing away with time consuming and cumbersome paper procedures involving forms.
Investors can track their mutual funds, bonds and shares under common demat accounts. Since “Know Your Customer” norms have been implemented already for demat accounts, investments can start right away.
On the first day of launch of NSE’s Mutual Fund Service System (MFSS), 30 select schemes of UTI Mutual Fund were available for trade. About Rs 78 lakh worth of MF units were traded on MFSS, from 316 applications. The BSE StAR MF platform, which launched four days later, had seven funds participating and 103 schemes traded on the first day. In all, 251 orders worth Rs 8.44 crore were placed on this platform.
Following SEBI Chairman CB Bhave’s advice, “Let us engage, as we compete”, both the bourses have decided not to levy charges on trading in mutual funds until April 2010, though they will charge exit loads.
“Going ahead, I believe this might make way for a service charge being levied by the broker, in return for execution-based research-based advice and other services,” said Nirmal Jain, Chairman and Managing Director of India Infoline group.