mutual fund: After investing in a mutual fund, how soon will I receive the certificate or account statement?

Q1. After investing in a mutual fund, how soon will I receive the certificate or account statement?
As an individual investor, you must have considered mutual fund investments as part of your portfolio. They offer you a great opportunity to diversify your investment portfolio across different investment instruments like stocks, debt and gold and create a portfolio that can potentially help you achieve your financial goals. There are mutual funds that invest exclusively in equity instruments or debt securities or a combination of both. Whatever your return expectations and risk appetite, there is a mutual fund that can potentially meet your needs.

So, if you’re an investor who doesn’t really understand how to invest or don’t have time to invest on your own, mutual fund investments can be a great choice. The best way to start your investing journey with mutual funds is to:

  • Define your goals (education of the child, purchase of a house, etc.)
  • Assess your risk profile
  • Select mutual funds that can help you achieve your desired returns and that match your risk profile
  • Choose whether you want to make a lump sum investment or start a Systematic Investment Plan (SIP), or do a combination of both

You can invest directly with the offline mutual fund by visiting their branch or you can contact an offline broker. Alternatively, you can invest online through the official website or through the many personal finance apps.

After successfully investing in the mutual fund, you will receive a mutual fund account statement. These are usually sent to you as an investor every 6 months whenever you invest in the mutual fund or redeem anything. You can also instantly download your account statement from the respective AMC website.

The account statement contains a summary of all your investments with the fund house in question. The declaration may contain the following details:

  • Personal and bank details: this section will display your name, address, email address and contact number. It is shared with you so you can make sure they have all your information correct and can make any necessary changes in case you want to change any of the details.
  • Folio number: This is your unique identification number with the SICAV. You can use this number for all of your investments with a particular mutual fund.
  • Cost and value of your investments: This section shows the cost of your investment, the units allocated and the current value of your investments based on the net asset value on the statement date.
  • Advisor name, EUIN and PAN details: If you have invested through an advisor, this section will display their name, code and EUIN number.
  • Transaction Summary: This section contains details of your transactions, including purchase/redemption, and whether you opted for SIP or SWP.

Now, you may also receive a Consolidated Statement of Account (CAS) which is a combined statement of all your transactions made during the month in all your mutual funds.

Q2. What are the differences between active funds and passive funds when it comes to investment funds? How can they impact your investment?
Mutual funds are professionally managed investment vehicles that pool the money of many investors and invest in a diversified or specific way for the benefit of all investors. Your goals define the mutual fund in which you should invest. Broadly speaking, mutual funds can be divided into active and passive mutual funds.

Here are the main differences between the two:

Active investing is a more active approach to mutual fund management. The role of the fund manager is extremely important as they make decisions in terms of the types and quantities of stocks to buy and sell in the fund’s portfolio. Passive investing follows general market returns. The strategy is more of a buy and hold strategy where the fund manager simply buys the same stocks as the benchmark and in the same proportion.
The objective of an actively managed fund is to consistently beat the returns offered by the market. The objective of the passive fund is to respond to market returns.
Active funds generally have higher fees because the fund manager must actively monitor investment opportunities. In addition, the transaction costs associated with buying and selling securities are higher for these funds. Passive funds have very low fees because they only track the index and don’t have too much turnover.
Active funds are relatively free to choose which stocks or investments they wish to invest in in order to achieve the highest risk-adjusted returns for their investors. Passive funds are limited to investing in the same way as the index. They are therefore quite inflexible.
It is not always clear which stocks or investments would be included in the portfolio. It is quite transparent to see the components of passive funds.

Active investing is for investors who want to take on higher risk and potentially earn a higher return, while passive funds are for investors who want exposure to investments with a lower risk appetite.

Q3. What is the meaning of a lock-up period in mutual funds?
Mutual funds are investment vehicles that pool the money of many investors and invest in stocks, debt, gold, etc. They are professionally managed and ensure that you can create a diversified portfolio of securities with different levels of risk and return. More importantly, mutual funds can potentially help you achieve your financial goals spread over several time periods, such as short term (1 year or less), medium term (1 to 5 years) and long term (more than 5 years). ).

Generally speaking, mutual funds can also be divided into closed-end mutual funds and open-ended mutual funds. While open-ended funds have no such requirement, closed-end mutual funds have a “lock-up period” of 3 years in general. This means that the investor cannot withdraw money from the fund for a period of 3 years from the start of the investment. This is done because too many redemptions at an early stage could disrupt the stability of the mutual fund and the funds available to invest. Too large a redemption could also mean that the fund manager may have to exit the fund’s investments prematurely to accommodate the fund’s redemption, which could hurt the returns of the fund as a whole. The blocking period contributes to preserving the liquidity enjoyed by the fund and to safeguarding the interests of all investors.

Although the main objective of a lock-up period is to preserve the value of the investment, you should ensure that your investment horizon is at least 3 to 5 years before investing in funds which have a blocking period.

This answer should not be considered “investment advice”. Please consult your financial/tax advisors to determine the financial implications of investing in mutual funds. Investments in mutual funds are subject to market risk, read all plan documents carefully.

Dolores W. Simon