Hi,
What are the challenges for not having SWITCH (units) option from one scheme to another within the same fund house when units are held in demat mode unlike SOA (statement of account) form?
Do you foresee anytime this feature/option may come for demat MF unitholders?
The lack of a switch option for demat-held mutual funds is primarily due to how transactions are processed, not because it’s technically impossible.
The difference mainly comes down to how the units are held and serviced. In SOA mode, the fund house manages the investor’s holdings directly, making it easier to process an internal switch between schemes. In demat mode, the holdings are maintained through the depository ecosystem, so transactions generally follow a different flow, where redemption and fresh investment are treated separately.
I haven’t really come across any news from SEBI or the depositories on enabling seamless switches in demat mode. My guess is it would involve a fair amount of operational changes and coordination across multiple participants, which could make it more complex to implement.