Thursday, October 13, 2016

Know your rights as a Mutual Fund Investor




From buying mutual fund scheme to redemption of such scheme, SEBI has provided certain right to the investor. 
 
Here are some of the Rights - 

1)   Offer document: Scheme information document (SID) and Statement of additional information (SAI) and Key information memorandum (KIM) are different document which is provided to the investor when one decides to invest in a mutual fund scheme. SID provides details regarding nature of the scheme, the strategy of investments and asset allocation, the benchmark of the scheme, details of fund manager and fund management team, fees and expenses of the scheme and so on. SAI provides details regarding the Asset Management Company, procedure followed for fund performance, details of key personnel, sponsor and trustee details their laws and regulations, details of auditors, tax and legal issues and other general information. KIM provides details regarding key scheme features, scheme performance record, terms conditions of investing along with the application form.

2)   Fees and Commission of distributor: One has the right to invest in the mutual fund scheme directly or through distributor. So if one chooses to invest through distributor then in such case the investor has the right to know the fees or commission which the distributor gets through the fund houses.

3)   Changes in the scheme: If the AMC wants to make any fundamental changes in the scheme then in such case AMC are obligated to inform their investors regarding such changes. But if the AMC fails to do so then the investor has the right to take action against the AMC.

4)   Annual report and statement: AMC are also obligated to send annual report and statement regarding the scheme to the investor every year.

5)   Complain Redressal: Every fund house has appointed an officer to attend to investor grievances. If the complaint is not resolved as to satisfaction then the investor can go to the compliance officer or even the CEO. If still the complain of the investor is not solved than the investor can move AMFI, or even Sebi, the industry regulator.
 
6)   Redemption process: Investors has the right to redeem the scheme units whenever they want in case of open ended scheme. It is mandatory that the fund house should complete the redemption process within 10 working days if the fund house fails to do so then in such case investors are entitled to receive an interest payment of 15% per annum for the period of delay. 


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