What is mutual fund?

Mutual funds pool monies invested by different people and invests them in different financial securities like stocks, bonds etc. Mutual funds are managed by professional fund managers in accordance to the fund’s mandate and investment objectives. Each investor in a mutual fund owns units of the fund, which represents a portion of the holdings of the mutual fund. Mutual funds offer benefits like risk diversification, professional management, small investment amounts and tax efficiency.

What are mutual fund services?

Mutual funds are managed by Asset Management Companies (AMCs). Other than fund management, AMCs offer the following mutual fund services for investors:-

Investments: You can invest in lump sum or through SIP

Redemptions: You can redeem units of open ended funds (except ELSS within lock-in period) at any time

Other investment facilities: You can avail investment facilities like switch, Systematic Withdrawal Plan, Systematic Transfer Plan etc.

View Account Statement: You can view your account statement, capital gains / (loss) statement etc. 

Update your KYC / PAN: You can update your KYC including your PAN

Update your bank details: Mutual fund transactions e.g. investments (including SIP), redemptions etc take place through your bank account. You can update your bank details any time by contacting the Asset Management Company

Mutual fund services can be availed either online or through the AMCs’ branch offices. 

Mutual fund advisory services - Distributors

Mutual fund distributors are intermediaries who can help you with your mutual fund transactions e.g. purchase, redemptions, SIP etc. If you are a new investor you need to submit your KYC documents to AMC for compliance before you can start investing. Distributors can help you get your KYC done and provide other services like portfolio reporting, bank change, email / phone number change etc. The most important mutual fund service provided by mutual fund distributors is guiding  you about selecting the right mutual fund scheme according to your investment needs and risk appetite. Investors do not have to pay distributors for their services, but distributors get a commission from the AMC. The distributors’ commissions get charged to scheme expenses (total expense ratio), which gets adjusted in Net Asset Value (NAV) of the scheme. Investors should note that only distributors registered with AMFI are authorized to sell mutual funds to investors.
 
Mutual fund advisory services - Investment Advisors

SEBI registered investment advisors (RIA) are also authorized to provide mutual fund advisory services to investors. Like mutual fund distributors, RIAs provide advice on mutual fund selection and can also help with transactions. Some RIAs can offer broader range of advisory services covering mutual funds, stocks, bonds etc. The most important difference between distributors and investment advisors is fees. Unlike distributors, RIAs charge a fee to the investor but they do not get any commission from the AMC. Mutual fund plans in which you invest through an RIA is likely to have lower costs than regular plans (i.e. investment through distributor).
 
Mutual fund service providers

Registrars and Transfer Agents (RTAs) are mutual fund service providers authorized by AMCs to process and track investor transactions. Investors or their financial advisors or mutual fund distributors can submit transaction requests to the RTA instead of the AMCs. The leading RTAs service multiple AMCs. If you have several mutual fund transactions involving multiple AMCs, it is more convenient to get your transactions processed through an RTA. RTAs also provide consolidated account statements known as CAS where you can view your transactions and summary across multiple AMCs in one place.