What are the Rights and Duties of a Mutual Fund Investor?


As you know, risks are involved with mutual fund investments. You should be aware of your rights and duties as a mutual fund investor. You should read the scheme related offer documents carefully. But, what does carefully actually mean? There are various factors that are encompassed under right and duties. Make sure you follow all the necessary duties before you make a final decision regarding your investment. If you are a first-time investor, you must have the required information and be well-informed about your rights. Websites like https://groww.in/explore provide the basic fundamentals that every beginner should know about in the field of investments. Here, we have discussed certain aspects that you should consider as a mutual fund investor.

Duties as a Mutual Fund Investor

You should read the offer document carefully. This is your duty as an investor. The following documents are enclosed as offer documents based on different aspects.

  • Scheme Information Document (SID) –As evident by the name, each and every information related to the scheme is intimated to the client in this document. The nature of the scheme, the strategies followed at the mutual fund, fund management, asset allocation, charges such as fees, taxation, expense ratio, and so on.
  • Statement of Additional Information – This information does not impact your investment in the scheme but tells you relevant information related to the scheme. The details about the trustees and the sponsors, information about the AMC, details of the auditors, taxations, and other legal information, and so on.
  • Key Information Memorandum – Certain aspects are necessary while you are filling up the common application form. To avail this information, you can refer to the Key Information Memorandum. Information related to the product, peculiar scheme features, past performance records, relevant terms, and conditions, etc are provided tp the investor at the time of signing up.
  • Fund Fact Sheet – It is always best to know about the fund details. This aspect intimidates the current and the past performance parameters of the mutual fund. You will be aware of the different sectors where the funds are invested, percentage allocations, benchmark comparisons, NAV, dividend, etc.

Rights as a Mutual Fund Investor

  • Account Statement – When you sign up with an AMC and invest the amount, you are entitled to receive an account statement. The AMC will issue a Folio or an Account number to you. The account statement, pertaining to the relevant account number, will display the invested amount and the total number of units allotted to you. As per the SEBI guidelines, you will get the allotment confirmation within 5 business days of making an investment. The information will be intimidated via email or mobile number.
  • Commission Rates – When you are making an investment, the financial advisor will advise you on various products for purchase. As an investor, you have the right to know about the commission rates offered to the advisors. Some of the advisors sell products that offer high commission. Therefore, you can ask for the commission rates and at the same time, you have the right to know about the products that suit your planning and objectives.
  • Dividend and Redemption – An AMC should credit your account with the dividend within 30 days from the date of declaration of the dividend. In case the company fails to do so, you are entitled to receive interest at 15 percent per annum for the period of delay. Similarly, you can redeem your amount back into your bank account. If the company doesn’t do so within 10 days of generating the request, you will receive interest at 15 percent per annum for the period of delay.
  • Regular Updates – As an investor, you will fill up the KYC norms. The company will ensure that you receive regular updates when new schemes are launched, about the interest rates, and so on.