There is no penalty for withdrawing from a fund in which one is investing through SIP mode, as SIP and withdrawal (redemption) are two separate mandates.
Is there lock-in period for gold ETFs?
– Abhay Jain
There’s no lock-in period for investing in gold ETFs. All ETFs including Gold ETFs are listed on an exchange and can be traded like equity shares, subject to liquidity, i.e., available of buy/sell quotes.
Do I have to pay penalty to withdraw some money from my SIP account?
There is no penalty for withdrawing from a fund in which one is investing through SIP mode, as SIP and withdrawal (redemption) are two separate mandates. However, exit load may be charged for redeeming before a stipulated period. In case of investment through SIP, every instalment is treated as fresh purchase. Thus, the exit load charged will depend on the holding period of each instalment. If one is investing `1,000 through monthly SIP in a fund that charges an exit load of 1% for holding period less than one year and now wants to withdraw towards end of two years, then investments made in the first 12 months will not attract exit load. Investments made after 12 months will attract the 1% exit load. Withdrawal from a plan does not automatically stop the SIP. Your SIP instalments will continue to purchase fresh units, even as you withdraw from the fund. Hence, if you do not want to continue with the SIP, then you would need to separately request for its cancellation.
How do mutual fund companies deduct their charges?
Asset Management Companies (AMC) charge investors for professional management of the fund and to meet regular operational costs. As the fund size grows, fees levied on the scheme reduces as per the slab mentioned in the Scheme Information Document. The total expense that the scheme can charge to the investor has an upper limit. This upper limit is governed by Sebi norms and is mentioned in terms of “percentage of daily net assets of the scheme”. Within the total recurring expenses charged to the scheme by the AMC, known as Total Expense Ratio (TER), investment management and advisory fee is charged as a percentage of daily net assets and is decided by fund houses from time to time within the overall cap on TER. In terms of frequency, fund houses can deduct charges at their discretion and there’s no pre-determined frequency.
(The writer is director, Investment Advisory, Morningstar Investment Adviser (India). Send your queries to firstname.lastname@example.org)