Would Zerodha consider offering MF in non-demat form?

There are more advantages of having mutual fund units in non-demat (SoA) form rather than demat form.
It would be great if Zerodha/COIN can include feature to have MF units in non-demat form!

My question:

  • Is it possible?
  • If yes, Does Zerodha have any plans to provide MFs in non-demat form on their platform?

MF in Demat have delay and restrictions(swp) in redemption.

Can’t they be pledged if in SOA?

No plans, but demat has it’s own advantages.

Thank you for the confirmation, siva.

@siva - Can you help me confirm a doubt?

I was reading about MF re-materialization charges here: https://support.zerodha.com/category/mutual-funds/tracking-your-portfolio/articles/how-to-re-materialize-mutual-funds

It says “The charges for rematerialization is Rs. 150 + GST 18%”. It is, however, not clear about whether it is talking about fund, or each investment in the fund.

So, for example - If I have a fund in COIN, where I did a weekly SIP for 2 years i.e. 100 SIP investments. What would be the re-materialization cost for this. Is it just 150+18% GST OR 100 X (150+18% GST)?

For ELSS, it seems to be the latter (“For ELSS funds the rematerialization charges will be Rs 150 per date of investment.”).
The tariff sheet says ‘per certificate’ (https://s3.ap-south-1.amazonaws.com/staticassets.zerodha.net/support-portal/intranet_file_uploads/2018/04/03/Article/NO7XUDEI_editedTariffpdf). I’m not sure what that means.

1 Like

@imnishantg
For Non-ELSS fund, it is one-time cost to Remat your fund. Applicable for each fund separately.
For ELSS fund, Remat cost is applicable on each SIP which makes it an expensive affair.

May I know why do you want to Remat in the first place?

I could only see one reason - keeping a liquid fund with an instant redemption feature in SOA (non-Demat) format. Because you can login to AMC website and withdraw money within 30 minutes, 24x7.

Because in Demat format, you have to wait for market to open and after redemption, you have to wait for T+1 for the redemption amount to be credited to your trading account, and then again it would take time to withdraw from the trading account to your bank account.

If the above is not the purpose, then I don’t find a good reason to remat your MF. If you want to analyze your portfolio with better graphs and charts and data mining on platforms like Kuvera, INDmoney (because Coin doesn’t give you such features. @siva Zerodha need to up the game here), you can still do it while keeping your MF in Demat format in Coin. All you need to do is import your CAS from CAMS and on those 3rd party platforms, you will be able to analyze your consolidated MF portfolio.

If you still want to keep in SoA (non-Demat) format, better to redeem the funds from Coin and reinvest that money directly on AMC or through websites like Kuvera etc. But it may incur in taxability and NAV difference.

1 Like

@rupeshmandal

Superbly articulated. This is exactly the way i go about it, when it comes to MF’s. Buy/Sell in Coin and rest all of the analytics in Kuvera/VRO using the CAS statement. The reason I chose Coin is for its flawless execution, fancy graphs are a second priority. By execution i mean, in Kuvera or Paytm or in any other SoA platforms when I’m making an investment transaction its like a live race against time and probability of transactions getting declined due to technical factors of UPI and the sheer hassle of doing a netbanking transaction is real. Whereas in Zerodha i can transfer money at my leisure from my slick bank app to the trading account overnight or before cut off and just concentrate on the execution on Coin. It might not be a big deal, but when transacting large sums north of 1L, it becomes nerve-wracking to see the ‘Processing’ icon spinning after money getting deducted.I would gladly give up ‘instant redemption’ for this peace of mind

Very true. It happened so on 26th Feb. Nifty 50 fell sharply and I made a lump sum investment in my brother’s portfolio on Kuvera and though net-banking payment was successful, due to some glitch on BSE Star platform, transaction ID was not generated. It went for reconciliation and that day NAV was missed in the process.

One benefit of keeping your MF investments on Coin along with your shares etc. on Kite is an easy computation of overall Tax P&L, and accordingly, better tax harvesting decisions for lower taxability can be made.

Thank you, @rupeshmandal and @yuvananda for your perspectives.

My main reason to evaluate the non-Demat format was long-term future optionality. Right now, I’m locked-in with Zerodha/COIN for all my investment. Right now, COIN has no charges associated with it.

If in the future, something has to change in terms of charges, I was reviewing the cost associated with switching. Hence, the question. If the charges are for each SIP, then I would’ve rather made that change now itself despite the benefits of having everything in one place.

I came across this; Should I get a Demat Account to buy units in Mutual Funds? - r/IndiaInvestments (gitbook.io)

Also, there were other reasons like STP, SWP, etc. I don’t know if it is possible in Demat format. But if it is possible, then it is a real shame that those features are not available in COIN yet, even after 3-4 years of existence. It would have enabled another level of automation that I’m seeking.

So, I was reviewing the pros-cons of ‘everything on COIN’ vs ‘moving to Kuvera/MFUtility/etc.’ for automating most of my MF investments.

CAMS + Kuvera route sounds interesting. I’ll try that.

No plans, in fact, SOA form has a lot of issues, as seen by the recent events and even more with with RTAs. Eventually, we think everything will move to demat mode. Being in demat also affords a lot of flexibilities like step-up SIPs, instant modification, easy pledgability, single portfolio view on Coin and much more.

Working on it. There were some anticipated regulatory issues and tech changes which delayed this by a lot.

The problem here is users have to keep uploading regularly which a lot of people don’t do. A work around involves asking email permissions etc, we aren’t comfortable doing that. We’ve observed this through a lot of behaviors. This is the reason why we haven’t built this and we’ve discussed this internally plenty of times. The only real solution to this is the Account Aggregator framework. Hopefully once the major banks and depositories are onboard, this will take care of the problem. Post that we can give a consolidated view of pretty much all financial assets without the users having keep uploading statements, share passwords and so on.

1 Like

True.

But there are other issues with Coin. Just talk about the MF investments made only on Coin. There is no better way to analyze them. Console provides limited insights only. Now, I would request you to download INDmoney app and import your portfolio and use it just for a week.

P.S. I do not work for INDmoney, nor am I getting paid to talk about them but I am only naming it because of the mind-blowing insights it provides. You just say wow!

Use it for a week and you would understand the depth of insight it provides. e.g. how much TER has been paid on this fund in (Rupees), what is the capital gain applicable (STCG and LTCG if I redeem now), what are the returns of the fund wrt India’s inflation, if there is news about an underlying stock in that MF, e.g. ratings of PNB changed, you get a notification along with the news, how much exposure you have in PNB in that MF. If there is any change of fund manager or fund attributes, it alerts you. Very thoughtfully deisigned. Such small but important details and insightful analysis, all based on AI. Yes, giving email access for the same is a bargain for it. I am okay with it. Others may not. That’s okay.

On the other hand, on Kuvera you don’t even have to give email permission. You can set an auto forwarder in your email manually so it auto-forwards CAS to Kuvera to fetch new updates. Also, you can manually upload the CAS file.

Forget insights, the unit allocation after investing on Coin is also so delayed. If I buy on Friday, by Saturday Kuvera and IMDmoney shows me the updated portfolio, while Coin updates the holding only on Monday after the market opens. So delayed updation of even unit allocation. On Kuvera daily NAV is updated as and when AMC update in the night - starts by 8pm onwards. On Coin NAV is updated only on next working day after market opens. So delayed information. Yes, I know checking daily NAV is a different discussion altogether but I am focusing only on the swiftness of other platforms and comparing it with other platforms. That’s it.

@nithin The basic need is that Coin needs a make-over. I don’t even remember when it was last updated. When we talk about Facebook, every 6 months they would release something or the other, a major update, make some changes, it keeps the momentum going. It’s a usual software development life cycle. Sometimes they get it right, and sometimes they get it wrong. It’s okay. E.g. The tagging feature recently launched on Console has lots of bugs but it is good. There is a displacement. Some change. Progress. Something new. But as Mark Zuckerberg says - you have to fail fast. Here, Coin is working at a pace of a snail. No offense, please. And please don’t defend saying only 4 people team is working on Coin because that argument is invalid as Zerodha is #1 in the market today, and is profitable so it can scale and get things done. E.g. 6 months since I officially requested for cut-off timing to be in sync with SEBI and yet not done. Ticket # 20200921976293

Now that on Kuvera I can connect Zerodha account and not only see the Shares but also place buy/ sell orders, I asked Kuvera team if I can place a buy/ sell order on Kite from within Kuvera using the API, why can’t I place a buy/ sell order on Coin MF order. FYI their CTO, Mayank is working on this feature.

If this happens, then as a business, think wouldn’t it make Zerodha a B2B2C company rather than a B2C company? Think of my words with a cool, calm mind. People would start using Kuvera because of better UI and features and yet be able to place Kite/ Coin order from Kuvera using API. Doesn’t it overshadow Zerodha from a business strategy point of view?

See, your holding is in the Demat account, if in future for whatever reason, you want to move out, you can take everything with you to a different demat account somewhere. That’s not a problem. So don’t think about future. Think of now.

Also, I agree that right now, Coin is absorbing the CDSL fee for redeeming units i.e Rs 5 per sell order because for SoA orders it is free. But then in the long run, Coin has to find ways to make money in a different way. For example, basic MF features that is available with other platforms and basic analysis and reports is free but deep analysis and insights like INDmoney provides can be a premium service that would generate revenue for Zerodha to compensate for the free services. But for this they have to act on it. Fast.