If you want the schemes to earn for you it is important for you to keep track of them properly. Just like checking bank a/c statement or pass book for correct and timely entries is imperative it is equally important to check MF statements and read it too. Here are some details you should cover while reading the statement.
Very often many investors being convinced by the alluring sales pitches of mutual fund distributors / agents / relationship managers, invest in various mutual fund schemes. But are the sales pitches such as - "Double your money in just 3 years". "You will get more than 25% returns if you invest in this scheme just for 3 years." (which we believe aren't trustworthy), making you overlook in excitement which schemes are you investing in, the option opted for, the NAV, whether your name and bank account details are correctly mentioned in the account statement, or even reading it well?
"You must take personal responsibility. You cannot change the circumstances, the seasons, or the wind, but you can change yourself." - Jim Rohn.
So well said by the famous motivational speaker, author and American entrepreneur.
Remember, it is vital for you as investors to be responsible and cognisant about your investment in mutual fund schemes. Just like you are vigilant about checking your bank account statement or pass book for correct (and timely) entries it is imperative for you to check your mutual fund account statement as well and read it too, after having received it. Here are some important details in the account statement which you must check in your mutual fund account statement.
1. Personal details - Primarily it is imperative for you to check whether the mutual fund account statement received by you, has your name correctly mentioned in it. Following the same, read whether your correspondence address provided by you, has been appropriately mentioned in the statement. In case if you find any or all of the above being incorrectly mentioned, it is imperative you to bring that into the notice of your mutual fund distributor / agent / relationship manager (in case he has filled the application form for you), or write directly to the mutual fund house citing these error(s) and ask them to correct the same, by once again providing the necessary proofs. Also if you changed your residence during any time until you are an investor in a respective scheme, it is vital on your part to inform the fund house about the change in residential address by signing in the change in correspondence slip (and providing suitable proofs thereto)
2. Bank account and PAN details - You also need to ensure that your bank account details such as bank name, your account number are accurately mentioned in order to avoid problems while transacting in a mutual fund. This especially applies in case if you have enrolled for a Systematic Investment Plan (SIP) mode, or even when if you want to redeem your investment. Similarly, PAN details too need to be checked carefully, as very often they are inaccurately mentioned.
In case of any erroneous record as far as bank account details is concerned you need to cite this to the mutual fund distributor / agent / relationship manager (if you have routed your mutual fund investment through him), or fill in a change in bank mandate slip, attached to bottom of your mutual fund account statement, and forward the same to the mutual fund distributor / agent / relationship manager or to the fund house directly. In case you change your bank account details after having done your investment in a respective mutual fund scheme, it is necessary that you sign the change in bank account details slip (attached to the bottom part of the account statement) and submit to the agent or fund house directly. For change in PAN details too you may write to the mutual fund house directly, and attach a self-attested copy of your PAN card.
3. Fund name and option - While you may have invested getting lured by the exuberance of the markets, or on the opinion of your mutual fund distributor / agent / relationship manager, or even taking your own investment decision; it is vital to check whether your account statement correctly mentions the mutual fund scheme (along with the option - i.e. divided or growth) you opted for. This is essential because your mutual fund account statement may reveal a different mutual fund scheme or an option, other than the one you opted for (in case you made your own decision) or your mutual fund distributor / agent / relationship manager advised you on. In case if you find any discrepancies on this you need to bring that to notice (of your mutual fund distributor / agent / relationship manager), or even write to the mutual fund house. You may fill in a switch application request slip (attached to the bottom of the mutual fund account statement), if the scheme mentioned in the account statement is not in accordance to the one desired by you.
Say if all the aforementioned details are rightly mentioned and if you don't have a task of getting the discrepancy(s) corrected; it is also imperative that you don't merely file the mutual fund account statement thereafter, but also read the other below mentioned details.
4. Folio number - It is a unique number which has been assigned to your investments made with the mutual fund house. Most mutual funds offer one folio number and several account numbers in the same folio for all investments. Thus if you intend to make further investment within the scheme (which you already have an exposure to) or invest in another mutual fund scheme of the same fund house you should ideally mention the folio number earlier allotted to you, as this can enable in easy tracking of your mutual fund investments.
5. Current cost and market value - The current cost refers to the investment amount, which enables you to obtain "xx" number of units at an "xx" value of NAV. It is imperative for you to know, at what NAV purchased a said mutual fund scheme, but mind you it is not the only criteria for you to invest in mutual fund scheme.
Our experience reveals that many investors' very often get lured by the "Rs 10" proposition and jump into buy New Fund Offers (NFOs). But is this the way you invest in mutual fund schemes? It is noteworthy that not all NFOs have delivered appealing performance to investors. Hence, it is essential to judge the value addition criteria before one jump into the NFO bus.
The market value mentioned in your mutual fund account statement helps in assessing the value of your investments as on the date on which the mutual fund statement is generated. So, it will reveal whether from the date of investment, until the date of statement of account being generated whether wealth creation has occurred or wealth erosion.
6. Transaction summary - This section of your mutual fund account statement reveals the transactions which have been done with the fund house. So say, in case you have opted for SIP mode of investing or a Systematic Withdrawal Plan (SWP) for redemptions; your future account statements would reveal these transactions (date wise), along with the other details such as NAV and number of units. Similarly, if you have opted for the dividend payout or reinvestment option (instead of growth), it would reveal the value of the dividend declared along with how they have been reinvested, when opted for the dividend reinvestment option.
It is noteworthy that the bottom part of the mutual fund account statement is a very interactive section which allows you as investors' to communicate things such as:
- Change in bank account details
- Change in correspondence address details
- Make further investments in a respective mutual fund
- Switch between various mutual fund schemes of the mutual fund house
- Redemption from a respective mutual fund scheme
It is therefore essential to use these communication / transaction slips carefully for informing and / or transacting with a mutual fund house. Remember, it is your hard earned money and therefore you need to ensure that mutual fund account statement mentions all the your details accurately as well as the scheme details, thereby safeguarding yourself.
(PersonalFN is a Mumbai-based personal finance website.)