The world of mutual funds would be a lot better if there were demats. Just imagine, an investor, regardless of which fund houses he invests in, gets to check what his portfolio value is daily. Private bankers provide this service to high net-worth clients. Close to one crore mutual fund investors would get the same?at a cost though.

Today, a mutual fund investor has to grapple with operational issues. For example, investors are given multiple folio numbers for investments in different schemes and fund houses. And over the years, they accumulate multiple folios that they can?t keep track of. And usually, at the end of the financial year, multiple mails of fund houses hound them with statements informing cost of units and their current NAV, causing investors to lose track of their investments. Some fund houses are even known to smartly ignore investors who they categorise as ?dormant?. This is because mutual funds charge their assets annually regardless. Some fund houses are also on a cost-saving drive and often don?t send statements.

Against this backdrop, there is a strong case for having demats. But then, why should investors foot the bill? A fund house expert said that fund houses would monetarily benefit if demats are opted for by mutual fund investors. Today, mutual funds charge 7-10 basis points to scheme assets annually?although most of their costs are, actually speaking, volume-led. Thus, it doesn?t cost more to send a statement of Rs 10 crore worth of holdings than one of Rs 5,000. Yet fund charges individual schemes on a value basis. Perhaps the solution lies in working out a common registrar and transfer platform. Today, there are two main players?CAMS and Karvy?who are providing these services. Having a common platform could rationalise costs for fund houses as well as give investors a chance to hold one account statement across fund holdings. To begin with, mutual funds could absorb these costs?as it will benefit them in the long run. Perhaps, the investors could be charged, but then it should also be within the overall cap of expenses for various categories of schemes. Are mutual funds game?

?muthukumar.k@expressindia.com