Hello everyone,
My investment horizon is more than 30-40 years.
So which is better for me?
Have Mutual Funds in SOA format or Demat format.
My Understanding:
DEMAT advantage: All investments are in a single account of govt (CDSL/NSDL), so I feel it’s more safe and easy to manage. And because of single account, it will also be easy for my nominee to get everything in case something bad happens to me.
That is very much true, and I can tell you this from my personal experience claiming SOA is not easy, every fund & different AMCs requires forms and notarized certificates which adds to the cost of claiming. Plus all AMCs are not available in small towns and villages which also adds up to the issue. Not everyone understands where to look for financial assets and sometimes SOAs do get overlooked until someone checks the CAS.
If you have 5 MF from different AMC think about changing your mobile no or bank account. It’s just a hassle, You can spend your valuable time on something better than filling out forms and sending them to AMCs.
This is true but if you use a platform like Kuvera then you can do all these things from one app.
In addition to the advantage, SOA (Kuvera is SOA) doesn’t cost anything however AMC will be charged when your investment crosses a certain limit (50k considering a BSDA a/c) in demat.
PS: Myself using Kuvera for last 4 years
I don’t think a nominee can claim funds via kuvera app, the nominee still has to contact individual amc and send them transmission certificates in case of SOA. 30-40 years is a long time and a wealth-creating time. Wealth is not always enjoyed by the creator sometimes it gets passed on to the next generation. Well, zerodha charges you amc, one can use other demat accounts which are amc-free (upstox, finvasia, fyers, mstock…) they too hold mf in demat form.
Thank you for replying. Very Insightful. 
Is there any way to find out which brokers stores mutual funds in demat account?
The amount of AMC should be looked at as a percentage of the total invested amount in my opinion.
For example:
if AMC=300 and Investment is 10,000 then AMC=3%
if AMC=300 and Investment is 10,00,000 then AMC=0.03%
In my opinion, if Zerodha and AngelOne take AMC then they should be able to provide better service, be profitable, and should be able to keep running in the long term.
And since they have a large user base, if any problem occurs, then whole media will be talking about it and will ask for solutions. SEBI will also jump in quickly to save investors. Even if some solution comes up, then also many people/newsChannels/Websites will make guides about the solution.
Now imagine some problem happening with a small company with little users. There won’t be much news, and not many people will be talking about it.
Therefore if the AMC% is low compared to invested amount, then in long term opening account with good/big broker is a good choice in my opinion. Example Zerodha, AngelOne.
Otherwise go with Upstox as it is free for investing in mutual funds.
PS: for reference.
I have marked the ones with either SOA or REGULAR Mutual Funds.
The ones which allow direct mf in demat form that I know of are upstox, finvasia, fyers, mstock, zerodha and angle. I am sure if you ask the firm they will tell you their mode of storage. If you are worried about broker going belly up then angel would be a good choice as it is a public listed company and you can keep a track of the financials. However anything in your demat account with T-pin service is pretty safe regardless of whether the broker firm going out or not.
Absolutely right
All of these are SoA form except Zerodha
My family member has an upstox account and I can personally confirm MFs are stored in SoA form for them. Have checked their CDSL holdings. MFs come under SoA in the CDSL statement
The same thread was discussed a few weeks ago. Only Zerodha and NJWealth (in the entire industry) hold in demat form as per the conclusion on that thread
Angel One also supports demat form but I think they do not do it by default
Nope, all of them are in demat form
Yes, this could be true, The old buy-in is SOA because they didn’t offer that at that time, now they do.
I confirmed with AngelOne also.
Very true. However, I will ask Kuvera about the nominee claim process and update it here. I have no issue paying AMC. Demat is the best way, my suggestion for SOA was for those who don’t want to take the hassle of maintaining a Demat account (family members who don’t have personal mobile, email etc nor are tech savvy).
% you should put it here, I would love to know, if this tedious paperwork can be cut off. You being a customer you will get the answer much more quickly.
Is there a difference in redemption speed for SOA and DEMAT?
For example if I redeem same Mutual Fund on MONDAY before cutoff time. When can I expect money for SOA and DEMAT.
Important for redeeming Emergency fund from say ARBITRAGE FUND.
An article by Mint seems to indicate that SOA is abetter format. You can read it here:
If you don’t have access, in short… 5/9 key areas SOA is better (in fact I believe it is more)
Kuvera customer support told me to file nominee claim and related requests on the MF Central platform.
But with demat form we can withdraw through that one broker only right? Suppose I invested through coin, then i have only one option to withdraw that is coin. What if one day coin stops its all services?
