You must fulfill certain duties and enjoy some rights as investor. An ideal investor is one who is aware of his rights, and disciplined and serious about his duties too. Some important rights that a mutual fund investor enjoys are freedom to go through the offer document of the scheme that you intent to invest in, email or sms alerts relating to your investments, receiving annual reports, periodic updates and other important communications from the fund house including any proposed change in a scheme’s traits. You also enjoy the right to know how much commission the person who is advising you to invest is getting from the fund house. You can also get your complaints redressed through proper channels and to your complete satisfaction.
You are entitled to following as an investor:
Offer Document: An offer to invest in a mutual fund scheme contains the scheme information document (SID) and a statement of additional information (SAI). You can also go through the key information memorandum (KIM) which gives important information about the scheme you intent to invest in as well as the fund house.
Color Coding: This is a new tool aimed at helping investors choose between mutual fund schemes which are least risky (Blue dot), moderately risky (yellow dot) and highly risky (brown dot). Each fund house labels every scheme with the appropriate code to make it easier for you to select the one best suited to your risk profile.
Email/SMS Alerts: Within five days of your investing in a scheme- either for the first time or as a continuing investor- you should receive an email alert or an SMS about your investments.
Fund Statements, Periodic Updates and Annual Reports: As an investor in a scheme, you should receive periodic updates from the fund house about the scheme as well as the fund house, its annual report and updates as and when issued.
Consolidated Statements: This is a new initiative in which all mutual fund investors get a consolidated monthly statement of all their fund related transactions in each scheme where he has investments, across all types of schemes, i.e. equity, debt, liquid, etc., and across all fund houses. If there is no transaction during a particular month or months, you will receive a half-yearly statement.
Redemption and Dividend Payouts: Within 10 working days after you redeem your investments, you should get your redemption proceeds. If this 10-day is overshot, you can claim interest at 15% per annum for the period of delay after the 10th day. In case of dividend payout, the outer time limit is 30 calendar days.
Change in Scheme’s Features: If the fund house changes any key attribute of the scheme you have invested in, you can redeem your investments in that scheme without paying any exit load.
Duties of a fund investor
As an investor, your first duty is to be KYC complaint. Some of the other important duties include updating your fund houses with your relevant personal information, keeping proper nominations for all investments, keeping tab of your investments on a regular basis, having a direct credit facility with your bank in place, etc.
All fund houses offer electronic credit and debit facilities with most banks that ensure fast, secure, safe and hassle-free banking transactions between you and your fund house for regular investments, dividend payouts and redemptions.