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Being an investor of mutual funds, everyone is well aware of the basics, process and all other factors that they need to know. But, are you sure that you have enough information about the fund you want to invest in? Well you should be.
It is a common practice of every investor to never worry about facts they do not know until they realize the implications of not knowing them. However, this is not correct. While registering with any online portal, we come across the terms and conditions to confirm that we abide by them and intend to join them knowing all the facts and figures. But do we really read them? Many of us don’t. This is because we believe that this is a common practice and such terms and conditions will not have much impact in our lives. Taking this kind of casual approach is fine at times, but in the case of mutual fund investments, it can end up with various complications. Thus, it is quite essential for every investor to perform the duties and fully exercise the rights to persuade them to make better investments.
Regulatory authorities in every country have set certain guidelines for the mutual fund industry. We must follow them and follow the rules to make the best decisions. All asset management companies (AMCs) that design and manage mutual fund programs are bound to disclose all documents related to the scheme to investors so that they are aware of every important detail about the fund in which they invest. want to do Investors also have certain duties and have different rights whenever they take an investment decision. they include:
Analyze offer documents
The scheme related documents including SID, KIM and SAI should be read thoroughly before buying funds. They provide every single detail of the scheme including its nature, type, assets, portfolio and instruments. With this, one can know about the ability of the fund to generate the required returns.
Receive annual reports, details and periodic updates
It is the right and duty of every investor to receive the Annual Report and Declaration from the AMC. Apart from this, there may be some other updates in the mutual fund houses which every AMC should inform the investors.
Receive dividend within time
Suppose you are an investor in SBI Mutual Fund and holding Equity Funds with Dividend Investment Plan. Then you are entitled to receive dividend payment within the time after declaration. This means that after the declaration of dividend by the AMC, the investors are entitled to receive their share within a period of time.
Receive updates on changes to plans
The fund managers of the AMC keep on tweaking the fund’s portfolio to capture the best opportunities and generate better yields. Investors have the right to receive information or updates about the changes made in the scheme so that they can take adequate steps in this regard as and when required.
Grievance Redressal System
Every fund house has a grievance redressal mechanism which focuses on addressing the problems of the investors. Whenever you have any complaint, you can approach the Grievance Redressal Department of AMC to get instant resolution.
Details about distributor commission
All investors have a right to know how much money or commission is paid by the fund house to the mutual fund distributor. Further, it is the duty of the distributor to disclose to the investor the commission or remuneration he may receive by selling other competing schemes.
Awareness of the rights and duties of the investors brings transparency in the fund management system. A well regulated scheme has specific benefits which help the investors in getting better returns. This gives investors a clear view of their investments and increases the potential for return generation. So you must be aware of all the updates related to the fund in which you are either invested, or intend to invest your hard earned money.
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