A Mutual Fund is a corporate body that pools the savings of a number of investors and invests the same in a variety of different financial instruments, or securities. The income earned through these investments and the capital appreciation realised by the scheme are shared by its unit holders or investors in proportion to the number of units owned by them. Mutual funds can thus be considered as financial intermediaries in the investment business, who collect funds from the public and invest on behalf of the investors. The losses and gains accrue to the investors only. The Investment objectives outlined by a Mutual Fund in its prospectus are binding on the Mutual Fund scheme. The investment objectives specify the class of securities a Mutual Fund can invest in. Mutual Funds invest in various asset classes like equity, bonds, debentures, commercial paper and government securities.

An Asset Management Company (AMC) is a highly regulated organization that pools money from investors and invests the same in a portfolio. They charge a small fee for fund management..

NAV or Net Asset Value of the fund is the cumulative market value of the assets of the fund net of its liabilities. NAV per unit is simply the net value of assets divided by the number of units outstanding. Buying and selling into funds is done on the basis of NAV-related prices. NAV is calculated as follows:

NAV= Market value of the fund's investments + Receivables + Accrued Income – Liabilities - Accrued Expenses The performance of a particular scheme of a mutual fund is denoted by Net Asset Value (NAV) and it varies on daily basis. For example, if the market value of securities of a mutual fund scheme is Rs 200 lakhs and the mutual fund has issued 10 lakhs units of Rs. 10 each to the investors, then the NAV per unit of the fund is Rs.20.

NAV is required to be disclosed by the mutual funds on a regular basis – on all business days or weekly – depending on the type of scheme. As per SEBI Regulations, the NAV of a scheme shall be calculated and published at least in two daily newspapers at intervals not exceeding one week. The NAVs are also available on the websites of mutual funds. All mutual funds are also required to put their NAVs on the website of Association of Mutual Funds in India (AMFI) www.amfiindia.com and thus the investors can access NAVs of all mutual funds at one place.

Equity Funds/ Growth Funds: Funds that invest in equity shares are called equity funds. They carry the principal objective of capital appreciation of the investment over the medium to long-term. The returns in such funds are volatile since they are directly linked to the stock markets. They are best suited for investors who are seeking capital appreciation. There are different types of equity funds such as Diversified funds, Sector specific funds and Index based funds.

Diversified Funds: These funds invest in companies spread across sectors. These funds are generally meant for risk-taking investors who are not bullish about any particular sector.

Sector Funds: These funds invest primarily in equity shares of companies in a particular business sector or industry. These funds are targeted at investors who are extremely bullish about a particular sector.

Index Funds: These funds invest in the same pattern as popular market indices like S&P 500 and BSE Index. The value of the index fund varies in proportion to the benchmark index.

Tax Saving Funds: These funds offer tax benefits to investors under the Income Tax Act. Opportunities provided under this scheme are in the form of tax rebates U/s 88 as well saving in Capital.

Debt / Income Funds: These Funds invest predominantly in high-rated fixed-income-bearing instruments like bonds, debentures, government securities, commercial paper and other money market instruments. They are best suited for the medium to long-term investors who are averse to risk and seek

Liquid Funds / Money Market Funds: These funds invest in highly liquid money market instruments. The period of investment could be as short as a day. They provide easy liquidity. They have emerged as an alternative for savings and short-term fixed deposit accounts with comparatively higher returns. These funds are ideal for Corporates, institutional investors and business houses who invest their funds for very short periods.

Gilt Funds: These funds invest in Central and State Government securities. Since they are Government backed bonds they give a secured return and also ensure safety of the principal amount. They are best suited for the medium to long-term investors who are averse to risk.

Balanced Funds: These funds invest both in equity shares and fixed-income-bearing instruments (debt) in some proportion. They provide a steady return and reduce the volatility of the fund while providing some upside for capital appreciation. They are ideal for medium- to long-term investors willing to take moderate risks.

Hedge Funds: These funds adopt highly speculative trading strategies. They hedge risks in order to increase the value of the portfolio.

Mutual Funds unlike fixed deposit, Bonds and other Government securities do not provide guarantee of returns. Their returns are directly related to the performance of the underlying asset in which they invest like shares, debentures etc which are known for the risk associated with them. The unit value may vary with the performance of the company, and companies may default in payment of interest/principal on their debentures/bonds/deposits. In addition to these, changes in macro level policies & regulations may also affect sectors in Indian economy thereby affecting mutual fund performance.

The non refundable fee paid to the Asset Management Company at the time of purchase of mutual fund units is termed as Entry Load. Entry Load is added to the NAV (purchase price) when you are purchasing Mutual Fund units.

The non refundable fee paid to the Asset Management Company at the time of redemption/ transfer of units between schemes of mutual funds is termed as exit load. It is deducted from the NAV(selling price) at the time of such redemption/ transfer. Exit load is not a standard charge; it varies from scheme to scheme depending upon the type & objective of the scheme. The funds which do not charge exit loads are known as 'No Load Funds'

Purchase price is the price paid by you to purchase a unit of a mutual fund scheme. If the fund levies an entry load, then the purchase price would be equal to the sum of the NAV and the entry load levied.

Redemption price is the price received on selling units of open-ended scheme. If the fund does not levy an exit load, the redemption price will be same as the NAV. The redemption price will be lower than the NAV in case the fund levies an exit load.

Yes. The tax applicable is called as STT i.e. Security transaction tax which is 0.25%. STT is applicable only in case of redemption of equity linked schemes.

Repurchase price is the price at which a close-ended scheme repurchases its units. Repurchase can either be at NAV or can have an exit load.

Some Mutual Funds provide the investor with an option to shift his investment from one scheme to another within that fund. For this option the fund may levy a switching fee. Switching allows the Investor to alter the allocation of their investment among the schemes in order to meet their changed investment needs, risk profiles or changing circumstances during their lifetime.

Systematic Investment Plan (SIP) means an option available with the Customer for investing, at a specified frequency, in a specified Scheme of the Fund, a fixed amount of Rupees for purchasing additional units at the applicable NAV on a specified date, assuming that the provisions of the Offer Document of the respective Scheme shall always be applicable for SIP transactions.

Systematic Transfer Plan (STP) means an option available with the customer who holds Units to transfer a pre determined amount or a variable amount subject to deduction of tax, if any, at a specified frequency, from a specified Scheme of the fund to another specific scheme of the fund at a specified period at a specified frequency at the applicable NAV on a specified date, assuming that the provisions of the Offer document of the respective Schemes shall always be applicable for STP transactions.

There is no lock-in period in the case of open-ended funds. However in the case of tax saving funds a minimum lock-in period is applicable. The lock-in period for different tax saving schemes are as follows:

Yes

The performances of Mutual funds are influenced by the performance of the stock market as well as the economy as a whole. Equity Funds are influenced to a large extent by the stock market. The stock market in turn is influenced by the performance of the companies as well as the economy as a whole. The performance of the sector funds depends to a large extent on the companies within that sector. Bond-funds are influenced by interest rates and credit quality. As interest rates rise, bond prices fall, and vice versa. Similarly, bond funds with higher credit ratings are less influenced by changes in the economy.

You can contact any of our branches to open an account or fill in the Application Form for opening an online trading account and our Customer Service Executive/ Relationship Managers will visit / contact you when you open your account. Once the processing of your form is completed, you can start investing in Mutual Funds online.

Yes. You can place your request even on a holiday. However, the request will be processed only on the next business day and the respective NAV will be applied as per the Mutual Funds' Offer Document.

Applicable NAV and Cut off

Liquid Funds

Subscription

Redemption

Other Schemes [other than Liquid Funds]

Subscription

For amount less than Rs.2 lakh

For amount equal to Rs.2 lakh or more

Redemption

SEBI - Know Your Client (KYC) NORMS : SEBI, based on feedback from investors, found that though certain basic requirements have been prescribed for Customer Due Diligence (CDD) or Know Your Client (KYC) for various SEBI registered intermediaries such as Mutual Funds, Portfolio Managers, Collective Investment Schemes and Venture Capital Funds, no specific KYC format had been prescribed. As a result, these intermediaries used different KYC formats and supporting documents. Thus, in order to bring uniformity in the Know Your Customer (KYC) process in the securities market and develop a mechanism for centralization of the KYC records and also to avoid duplication of KYC Process across the intermediaries in the securities market; SEBI vide Circular No. MIRSD/SE/Cir-21/2011 dated October 5, 2011, SEBI (KYC Registration Agency) Regulations, 2011 and Circular No. MIRSD/ Cir-26/ 2011 dated December 23, 2011 introduced the concept of KYC Registration Agency (KRA) effective January 01, 2012 and also KYC (s) are to be registered with CKYCR (Central KYC Records Registry) vide SEBI vide Circular No. CIR/MIRSD/66/2016 dated July 21, 2016.

Fill the new KYC application form: Documents evidencing Proof of Identity and Proof of Address to be provided (List of requisite KYC documents for individuals and non-individuals are mentioned in the KYC Application Form)

IPV stands for In Person Verification wherein verification of investor is carried out in-person by the intermediary at the time of accepting the documents from the investor for KRA/CKYC registration.

Please Note:

PAN is required to be entered on the CVL KRA website (under KYC Inquiry) to check the status of the KRA. Then based on the status received from the cvlkra site, clients have to action out as mentioned in the chart below.

The existing KYC compliant investors can continue to invest as per the current practice. However, existing investors are also urged to comply with the new CKYC requirements.

Once your KRA has been completed through any AMC and the status of your KRA is "KYC Registered/ Verified/ Approved with KRA" on any of the KRA websites, please contact SMIFS Limited Customer Care Help Desk / Relationship Managers for updation of your KRA in our system basis which we will activate your account for investments in mutual funds.

Yes. There is an online facility to place nomination request.

Nomination Registration

The SEBI (Mutual Fund) Regulations, 1996, notifies that the mutual fund shall provide for nomination facility to the unit holders to nominate a person in whose favor the units shall be transmitted in the event of death of the unit holder.

Nomination facility:

Nomination Modification/Cancellation:

To modify/cancel an existing nomination, the investor is required to fill in the Modification/Cancellation form and submit the same duly signed to the Customer Service Center.

The cancellation of nomination can be made only by those individuals who hold units on their own behalf, single or jointly and who made the original nomination and the request has to signed by all the holders.

On cancellation of the nomination, the nomination shall stand withdrawn and the AMC shall not be under any obligation to transfer the units in favor of the Nominee.

Change of Address:

KYC Complied Folios / Investors: In case of change of address for KYC complied (verified)folios, the investors shall be required to submit the below stated documents to the designated intermediaries of the KYC Registration Agency: Proof of new address (POA) and, Any other document the KYC Registration Agency / Central KYC Authority may specify from time to time.

KYC not Complied Folios/ Investors: In case of change of address for KYC not complied (not verified) folios, the investors shall be required to submit the below stated documents: Proof of new address and, Proof of Identity (POI): Only PAN card copy, if PAN is updated in the folio; In case where PAN is not updated, copy of PAN card or the other POI as may be prescribed.

However, it is advisable to these investors to complete the KYC process.

Units in Demat Mode: For investors holding units in demat mode, the procedure for change in address would be as determined by the depository participant.

Note: List of admissible documents for POA and POI as mentioned in the SEBI circular no. MIRSD/SE/Cir-21/2011dated October 5, 2011 shall be considered or any other or additional documents as may be required by SEBI, AMFI or SEBI authorized KYC Registration Agency from time to time.

In case, the original of any of the aforesaid documents are not produced for verification, then the copies should be properly attested/ verified by the authorities who are authorized to attest as per SEBI circular no. MIRSD/SE/Cir-21/2011 dated October 5, 2011.

Some schemes like ETFs are compulsorily allotted in demat mode. Hence to transact in such a scheme you need to have a Demat Account linked to your trading account. For allotment in physical mode there is no need for a Demat account. As per recent developments in the industry, units of all mutual funds schemes can be allotted in both the modes i.e. Physical as well as in Demat. Also, the depositories have allowed the DPs to facilitate holding of mutual funds in demat account.

Yes. Being an NRI, mutual fund units can only be bought in NON-PINS account.

An abridged offer document, which contains very useful information, is required to be given to the prospective investor by the mutual fund. The application form for subscription to a scheme is an integral part of the offer document. SEBI has prescribed minimum disclosures in the offer document. An investor, before investing in a scheme, should carefully read the offer document. Due care must be given to portions relating to main features of the scheme, risk factors, initial issue expenses and recurring expenses to be charged to the scheme, entry or exit loads, sponsor's track record, educational qualification and work experience of key personnel including fund managers, performance of other schemes launched by the mutual fund in the past, pending litigations and penalties imposed, etc.

Mutual funds are required to dispatch certificates or statements of accounts within six weeks from the date of closure of the initial subscription of the scheme. In case of close-ended schemes, the investors would get either a demat account statement or unit certificates as these are traded in the stock exchanges. In case of open-ended schemes, a statement of account is issued by the mutual fund within 30 days from the date of closure of initial public offer of the scheme. The procedure of repurchase is mentioned in the offer document.

According to SEBI Regulations, transfer of units is required to be done within thirty days from the date of lodgment of certificates with the mutual fund.

A mutual fund is required to dispatch to the unit holders the dividend warrants within 30 days of the declaration of the dividend and the redemption or repurchase proceeds within 10 working days from the date of redemption or repurchase request made by the unit holder.

You can view Mutual funds portfolio tracker available in the Mutual Funds section of www.smifs.com. It displays cost of your holding, the current value of holding, realised gain/loss, unrealised gain/loss, IRR (Internal rate of returns), etc.

Change of Bank Mandate: In case of change of bank request, the investors shall be required to submit the below stated supporting documents to effect the change:
Change of Bank Mandate Form
Original cancelled cheque of the new bank with the investor name mentioned on the cheque
or

Copy of the bank statement/pass book duly attested by the new Bank, evidencing the name and bank account details of the investor (The bank statement shall not be later than 2 months old)

In case the request for change in bank account information and redemption request are in the same transaction slip or letter, such change of bank mandate shall not be processed.

However, the valid redemption transaction will be processed and the payout would be released as per the specified service standards and the last registered bank account shall be used for all the purposes.

Cooling Period: If the investor submits redemption request accompanied with a standalone request for change of Bank mandate or submits a redemption request within seven days from the date submission of a request for change of Bank mandate details, the Distributor/ AMC will process the redemption request but the release of redemption proceeds shall be deferred on account of additional verification, but will be within the regulatory limits as specified by SEBI from time to time.

Change of Bank Mandate for Systematic Investment Plan (SIP): In order to change the existing bank account for SIP, investors need to submit following documents 30 days before the next SIP debit date:

A new ‘SIP’ Form with change of bank details and cancelled cheque of new bank evidencing the name and bank account details of the investor.

Letter to discontinue the existing SIP.

Documents are required for effecting Name change : Name change request can be accepted from an investor, in the below mentioned scenario(s) :

i. Notarized copy of Notification in Official Gazette of India

ii. Attestation from the bank manager of the Bank whose mandate has been provided at the time of original investment, confirming the Investors Name, Bank branch, Account number and Signature.

iii. Any official/legal document reflecting the name change viz.:

iv. Bank statement from the same bank of which bank mandate is on our record Passport.

v. Attestation from School Principal confirming the name change and registered accordingly in the school records – This is for applications made by minor investors

i. Notarized copy of the marriage certificate

ii. Certified true copy of the state Gazette OR the original copy of the state gazette in which a declaration has been made to that effect.

i. Notarized copy of the divorce certificate

ii. Certified true copy of the state Gazette OR the original copy of the

iii. State gazette in which a declaration has been made to that effect.

i. Account statement

ii. Void cheque copy from the investor with his/her name clearly printed on the cheque. The name should match with the name change requested by the Investor.

iii. In absence of such a Cheque, an attestation from the bank manager of the Bank whose mandate has been provided at the time of original investment ,confirming the Investors Name, Bank branch, Account umber and Signature.

iv. Photo ID with Signature i.e. PAN Card (If not already available), Passport, etc.

v. Indemnity Bond on a plain paper, duly signed by all the holders in that folio. In case of minor or major name correction and the investor being a minor, the documents will remain the same. The Indemnity bond will be submitted by the Parent/guardian.

a. Accounts of Minors:

Name of the guardian along with relationship must be mentioned, if the investments are being made on behalf of a minor.

Guardian of the minor should either be a natural guardian (i.e. father or mother) or a court appointed legal guardian.

Joint holding is not allowed, if the first applicant is minor.

If the first applicant is minor, date of birth along with photocopy of supporting documents as enumerated below shall be mandatory while opening the account on behalf of minor:

In case of natural guardian, a document evidencing the relationship has to be submitted, if the same is not available as part of the documents submitted as proof of date of birth of the minor applicant.

In case of court appointed legal guardian- a notorised photo copy of the court order should be submitted along with the application.

b. Change in Tax Status (Minor Attaining Majority): Upon attaining majority, a minor has to write to the fund, giving his/her specimen signature duly authenticated by his/her banker, as well his/her new bank mandate, PAN details, KYC acknowledgement letter, in order to facilitate the Fund to update its records and permit the erstwhile minor to operate the account in his/her own right.

List of standard documents to change account status from minor to major: