Mutual fund distributors earned Rs 6617 crores in commissions in FY 2020-2021

[rupeshmandal]

@Bhuvan

@UpperCircuit

Using a demat account to hold mutual funds offers hardly any benefits, is inflexible and only increases complexity.

Quite the opposite, you can manage all your investments in one single place as opposed

Agree that many years back having MF was a hectic task. Multiple folios, scattered here and there. But with the new age solutions like Kuvera, Paytm Money etc. all mutual fund investments can be managed from one single place.

@Bhuvan

to manage your stocks, bonds, ETFs in one place vs MFs in another place.

Yes, this is human truth to have all under one roof. But currently, Coin has many deficiencies that creates unnecessary ‘Rodha’ in the way of an investor.

@Bhuvan

You have a single nominee for all your investments, which makes pledging, obtaining loans easier and makes rebalancing easier because of the single view of all your investments.

This is possible with new-age mutual fund platforms like Kuvera, Groww, Paytm Money. All hiccups which mutual fund investors faced earlier don’t exist anymore. With features like TradeSmart in Kuvera, rebalancing is much easier than Coin.

Please note:

1. If you have MF in SoA format, you can also register for MFUtility and get a CAN number and then once you submit a change request to MFU, it gets reflected by all AMCs. From nominee change to bank a/c or address change etc. One application to MFU and changes are updated everywhere. Even in case of death, the nominee can go for MFU single window. Currently, some of the processes are offline. But MFU is making the process online as we speak.

2. Holding mutual funds in Demat format has one major drawback - Cut-off timing is not in sync with BSEStarMF. While Coin cut-off is at 1:30 pm, for all funds and for both buy and sell orders, with Kuvera, Paytm Money, Groww you can place an equity fund buy order till 2:30 pm (you get 1 hour extra) and sell order until 3 pm (you get 1 hour 30 minutes extra). So with MF in SoA format you get extra time to place an order compared to having MF in Demat format.

3. Another drawback of having mutual fund in Demat format is you can’t take the benefit of insta redeem liquid funds and upcoming insta redeem overnight funds.

4. If you have mutual funds in Demat format, after redemption, it takes longer to reach your bank account. First, the redemption amount goes to your trading account, and then you have to manually withdraw it to your bank account which takes additional time. If you happen to receive funds late on Friday evening, or if you forgot to withdraw it, you will only be able to withdraw on Monday when the market reopens. With MF in SoA, the redemption amount goes directly to your bank account which is faster.

To sum up, the argument that having a mutual fund in Demat format gives you the benefits of one platform to do everything is not exclusive anymore. Because the new-age platforms like Kuvera and MFUOnline provide you the single window access.
Apart from the single-window argument, the above-listed demerits of having mutual funds in Demat format actually give a minus point to having mutual funds in Demat format.