Skip to main content

Security tightened for your Mutual Fund investment

MUTUAL fund houses are increasing the security features related to investing in their funds to prevent frauds. One of the measures has been non-acceptance of third party cheques from November 15, 2010.

This will have a significant impact in ensuring investors get the units for the amount that they invest, but the mutual funds are not stopping there. They are also asking investors to change the manner in which they write the cheques at the time of investment so that there is adequate safety present here too.


Fraud: Fraud is one of the worries that investors face while investing in a mutual fund scheme. There have been instances where investors have given the application form with a cheque, but have found that the units have been allotted to someone else even though the money has been withdrawn from their accounts.


This happens because the application form of the investor is switched at the time of making the investment, so while the cheque amount goes from the investors' account, the name, address as well as bank details are of some other investor's.

At present, investors write the name of the scheme when they invest in it. Apart from non-acceptance of third party cheques, funds are now also asking investors to add an additional detail when they write a cheque for investment. There are a few variations in the form of the additional detail that will have to be added, but it has to be noted that all the funds might not allow for all the routes mentioned here.


PAN: Normally an investor writes the name of the scheme on the cheque when they invest their money into a mutual fund.

This process was enough for the amount to be used for the allotment of the units, but now, fund houses are asking for an additional detail beyond the fund name to be written on the cheque.


One of them includes the Permanent Account Number (PAN), which is a unique number for each investor.

Thus, this becomes a distinguishing mark for the investment and hence will be able to ensure that the investment amount is not credited to the folio of some other investor. The PAN of the first investor has to be mentioned and this can also be checked with the details that are recorded with the fund. In this case the details will be written as `ABC scheme a/c ­ XXXXXXXXX'.


Investor's name: Another measure that the mutual fund houses are asking investors to adopt is mentioning the name of the first investor after the name of the scheme in the cheque. This is done to ensure that some other person does not use the cheque for the purpose of depositing it into their account and thus perpetuate a fraud. The mutual fund on its part will credit the units only into the folio of the investor whose name is mentioned on the cheque after the scheme name.

This can be done by mentioning the following details -`ABC scheme a/c -Full name of the investor'.


Folio number: For existing investors the situation can be made easy with the use of the details of the folio number after the name of the scheme in the cheque. This is a number that is allotted to each investor by the mutual fund house when they make an investment with them so that the details can be easily accessed when required.

Existing investors who want to make additional investments with the fund can adopt this route too if the fund allows it and this will be another safety feature.


Again, the mention of the number ensures that the money is not appropriated by someone else even if the cheque falls into their hands and this is precisely what the mutual fund houses want.


This will be written as `ABC scheme a/c ­ Folio No'.

 

Popular posts from this blog

ICICI Prudential Dynamic Plan Invest Online

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   ICICI Prudential Dynamic Plan             Invest Online This fund does remarkably well during falling markets, but fails to show the same prowess during a rising market. The fund sticks to its mandate to adapt to the dynamic nature of the market by shuttling between debt and equity. It takes aggressive asset calls in equity when the market surges by investing in quality mid-cap stocks. At the same time, it adopts a defensive strategy by investing in debt and cash when markets get overvalued, making it a good long-term choice.     For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call     Leave a missed Call on 94 8300 8300   Leave your comment with mail ID and we will ...

Mutual Fund Review: ING Dividend Yield

  ING Dividend Yield's small assets enable the fund manager to churn in impressive returns… Strategy The aim of the fund is to invest in stocks which offer a high dividend yield. This fund deploys a value based strategy which aims to gain from investing in fundamentally strong and free cash flow generating businesses. The scheme focuses not only on growth but also on the cash generated by the business, which mostly leads to stable returns even in volatile markets. This fund has a low volatility because of its investment in high yielding stocks. The scheme tries to include stocks that yield dividend above the dividend yield of the Nifty and stocks with liquidity, which throws up a universe of 150 stocks.   Our View Launched in October 2005, this fund invests at least 65 per cent of its assets in high dividend yield stocks. The fund has consistently maintained a mix of stocks across varying market capitalisation, with a higher tilt to mid caps compared to small caps. Howev...

About CRISIL IPO Grading

CRISIL IPO (Initial Public Offering) Grading is an opinion on the fundamentals of the graded issue that reflects CRISIL's independence and expertise. This opinion is expressed as a relative assessment in relation to other listed equity securities in India. The assessment is based on a grading exercise carried out by industry specialists from CRISIL Research. A CRISIL IPO Grade 5/5 indicates strong fundamentals and a CRISIL IPO Grade 1/5 indicates poor fundamentals. CRISIL IPO Grading reflects its assessment of the graded company's equity fundamentals as distinct from an assessment of debt fundamentals. A CRISIL IPO Grade should not be construed to mean a comment on the price of the graded security nor is it a recommendation to invest or not to invest in the graded security. However, this grade is not an opinion on whether the issue price is appropriate in relation to the issue fundamentals. The grade is not a recommendation to buy / sell or hold the graded instrument, or a comm...

Lump Sum or SIP?

Invest Mutual Fund Online     You have a lump sum in hand and you wish to invest in equity funds. However, you have heard a lot of talk about investing in equity funds through Systematic Investment Plans (SIPs) because they help average costs, ensure you do not ill-time the market, and help you invest in small sums, besides giving you many other advantages. So, should you invest the money you have in hand in one go, or let it remain in your bank account and then do an SIP? There is no harm in investing a lump sum amount. For all you know, compounding, over the long term, could work better with lump sum. However, make sure you fulfill all of these three criteria if you want to invest in one go. Else, SIP is the way to go. #1: You invest for the long term According to past data, ideally, if you have a time frame of 12 years or more, you can consider lump sum investing (provided you satisfy the other two conditions that follow). So, what is the sanctity behind 12 years? Is it because only...

Capital Protection Oriented Funds

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Capital Protection Oriented Funds   Erosion of capital is one of the key concerns for investors wanting to invest in equity mutual funds. To address this concern, asset management companies have launched Capital Protection Oriented Funds (CPOFs). What are CPOFs? CPOFs are generally three to five-year, closed-ended funds where 70-80% of the portfolio is invested in fixed income securities, which mature on or before the scheme's tenure. The investment in fixed income securities grows to 100% at the end of the tenure, providing the investor with capital protection. The remaining portion (20-30%) is used to take exposure to equity, which provides the upside. Exposure to equities is either by directly buying equity stocks (plain vanilla CPOFs) or by b...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now