Mutual fund units can be transferred only after the demise of the unit holder.
Do not reduce/stop SIP due to market volatility l As the stock markets are very volatile now, should I continue my SIPs or reduce my SIP amount? – Yogesh Gupta
Since a retail investor does not have enough time and resources to diligently track the markets, Systematic Investment Plan (SIP) is a viable option to avoid the risk of timing the markets and benefit from rupee cost averaging, i.e., buying more units when NAV is low and less units when NAV is high. Moreover, it helps one avoid behavioural pitfalls like buying more when everybody is buying or selling when every-body is selling. Market volatility should not be a reason to reduce the amount of SIP.
* Can I transfer my mutual fund units to my daughter? —Rachit Khurana
Mutual fund units can be transferred only after the demise of the unit holder. You can make your daughter a nominee of your folio. If you want to gift your daughter your units now, you need to redeem those units and then transfer the proceeds to her account.
*If I invest directly in a mutual fund, will the expense ratio be lower? —Prem R Kamath
A direct plan is the one that an investor buys directly from the mutual fund. Since there is no intermediary involved in this transaction, the AMC does not have to pay any commission or trailing fees. A regular plan is one that is purchased through an intermediary who helps the investor understand the investment strategy of the fund, fill the forms, etc. For this service, the AMC pays commission to the intermedi-ary. This cost then reflects as a higher expense ratio of the regular plan. If you are investing through a bank that is registered as a distributor you are invest-ing in a regular plan (with higher expense ratio) and not a direct plan (with lower expense ratio). On the other hand, if the bank is a Registered Investment Advisor the investment could be in the ‘direct’ plan.
*As no tax-free bonds are being launched, it is possible to buy old tax-free bonds from the market? —Shishir Kumar
Tax-free bonds are listed on the debt segment of stock exchanges and can be traded there, though the liquidity may vary. An important feature of tax-free bonds is the differential coupon applicable for institutional and retail options of the same bond, which may result in different prices and yields available on those bonds.
The writer is director, Investment Advisory, Morningstar Investment Adviser (India). Send your queries to email@example.com