NSDL says smart investors choose the demat route for mutual fund. But the really smart investors would not want to waste their money, or get into unnecessary hassles which the demat system involves
Two years after the regulator pushed mutual fund investors down the stockbroker-demat route, the strategy is beset with high charges and low customer interest. Undaunted, the National Securities Depository Ltd (NSDL) is still pushing it hard.
An advertisement blitz just released reads: "Be a smart investor. Hold your mutual fund units in demat." Investors are indeed smart. Demat is a costly affair and many smart long-term investors actually do not demat even their old shares. Since holding mutual funds in demat form is not compulsory, unlike shares, investors exercise the smart choice, avoiding NSDL's pitch to go the demat route.
A demat account for mutual funds is similar to that for shares. Now, the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) are offering a platform to buy and sell mutual funds. You can subscribe to mutual fund units through your stock broker using the stock exchange platform. On subscription, the asset management company (AMC) or registrar and transfer agent (RTA) will credit the mutual fund units to your demat account. For existing mutual fund holdings, you have to obtain a conversion request from your depository participant (DP) and after appropriate verification, the AMC or RTA will credit the mutual fund units to your demat account.
Demat does have its advantages. It helps consolidate all of one's holdings and allows a view of investments in a single snapshot, rather than having to go through several statements issued by different mutual funds. Earlier, if one had 20 schemes in 15 different fund houses, there would be as many statements. You one can get a simple statement for all holdings with all the AMCs. Also, holding mutual fund units in the demat format enables one to manage a portfolio better. One can monitor all the schemes at one go. Buying and selling in dematerialised units is supposed to be faster and simpler.
But if one does not trade in fund units, is it really worth the cost? There are several layers of costs associated with holding mutual fund units in demat form: the depositories and brokers are both out to claw some money from you. One would have to pay a charge to open the demat account, as well as the annual demat fees. Sales of units would also involve a charge of Rs20 on each occasion. This charge varies from DP to DP. And if the DP is not the bank that is directly linked to the AMC, it could take around 7-10 days for the money to be credited to your account. Sometimes, there's confusion regarding the differences in the name, or the initials in the name in which the demat account is opened and the one in the bank records. If the demat account has the name Anjali R Shah and the bank account has the name Anjali Shah, getting the amount credited could take months together. Banks have a habit of putting these kinds of small disputed amounts mindlessly in a suspense account and making you run around for it. At that time, you will not look smart and NSDL will surely not be anywhere to help.
The demat route has brokerage costs as well. The broker charges his normal commission at the time of purchasing or selling MF units (generally 0.30-0.40% of the value of units bought or sold). Again, the brokerage is negotiable and depends upon the broking firm one chooses. An investor using an online brokerage portal will be charged by the online trading company. Most importantly, while dealing through stock brokers, you cannot do SIPs/STPs, which are very popular with mutual fund investors. In fact, when we called a broking company about opening a demat account to buy mutual funds, we were dissuaded to do so because of the unnecessary costs involved.
So, while NSDL claims that it is smart to use the demat route for mutual funds, the problems on the ground and the cost of taking this route for no added benefit will continue to keep investors away. Keep your financial life simple–avoid mutual fund demat as long as it is not compulsory.
While the rest of the cold drink brands are stuck with babes, stunts and lifestyles, Pepsico has sprung a new interesting concept that is a relevant and highly campaignable idea
Must say for this hot, hot, searing summer, PepsiCo, the makers of 7UP, have come up with a cool, cool idea. So while the rest of the cold drink brands are still into babes, stunts, lifestyle, etc, 7UP has sprung up with a new and very interesting concept: Anger management. Ergo, the cold drink will now help you keep your head cool, and avoid potential conflicts caused by heat and rage.
'Gussa Hatao, Chill Machao' is the message, and I really think they are on to a good thing out here. Because the country is angry, there is a lot of pent up frustration among the junta. There is rage against bad governance, inflation, corruption, traffic, pathetic living conditions… the list is endless. All, of course, compounded during summer. And indulging in road fury has become a national pastime. In this heated scenario, a cold drink becomes a natural corollary. Yup, it's a powerful idea, and in the Indian context, one wonders why no one thought of it before.
The commercial I watched (and I assume there shall be more) features 7UP's brand ambassador, actor Sharman Joshi. A parked bike rider has mud splashed all over him by a speeding truck. Enraged, he gives the trucker a hot pursuit to teach him a hard lesson on road etiquette. Sharman, meanwhile, is seated at the back of the open truck. And he playfully engages the heated bike rider in a conversation. With questions like whether he is a black belt holder, a regular gymmer, a medical insurance holder or a police officer's son. When the biker responds to all in the negative, Sharman advises him not to risk a confrontation with the macho trucker, and instead gulp his anger down with a cool 7UP.
Well, a decent commercial. Reasonably funny, and Sharman, true to his screen image of a cool dude, is cast correctly. But 7UP needs to milk this solid idea with zanier commercials. And produce many of them, so that the brand quickly becomes the custodian of anger management in India. A relevant, long-term, highly campaignable idea, this one. And rage isn't gonna go away from India in a hurry… rather, it will only rise!
Moral of the story: A good idea is everything; once that's in place, all else follows smoothly. A lesson for the rest of the cold drink makers stuck with mega movie stars, heavy duty sportsmen and beautiful faces, and some really silly scripts and executions.
Investigating agency says while Swan was used by RCom, Loop was used by Essar, and that both Swan and Loop will face charges of cheating and conspiracy
New Delhi: The Central Bureau of Investigation (CBI) today informed the Supreme Court that Swan Telecom and Loop Telecom were used as front companies by established telecom players to get 2G spectrum illegally during the tenure of former telecom minister A Raja.
The agency, which filed a status report in a sealed envelope before a bench of judges GS Singhvi and AK Ganguly, said Swan Telecom and Loop Telecom were allegedly used as front companies by the Reliance Group (ADAG) and Essar respectively. Essar already has a stake in Vodafone.
Swam Telecom's promoter Shahid Usman Balwa has been arrested by the CBI, and Reliance Communication's chairman Anil Ambani has also appeared before the agency in the 2G spectrum case, reports PTI.
The CBI submitted before the Court that Swan and Loop hid details about their companies to get spectrum and that they would face charges of "cheating" and "criminal conspiracy".
The agency said that there was evidence of "forgery" in altering the first-come-first-serve policy, to allow some companies to get 2G spectrum during Mr Raja's tenure as telecom minister.
The CBI said the main charge-sheet will be filed on 2nd April against four individuals including Mr Raja, some telecom officials and two companies for their involvement in the scam. It said that a supplementary charge-sheet would be filed by 25th April and investigations in the matter would be completed by 31st May 2011.
Senior advocate KK Venugopal, appearing for the CBI, placed a transcript of the telephonic conversation of corporate lobbyist Niira Radia with top corporate honchos and politicians and said, "these telephonic records will be used as evidence in criminal prosecution of the accused in the scam."