Advantages of holding MF Units as SOA (Statement of Account) versus Demat holding

We have been receiving lots of queries regarding holding of mutual funds in Demat format in comparison to statement of account(SOA) format.Though holding in Demat  ensures all holdings in a single platform but it has it's  limitations and cost attached.

Where as investor now a days receive a consolidated  account statement from NSDL

 every month which reflects complete holding of mutual funds along with shares holding in a single statement thus the concern of investors not having a single statement is addressed

We are sharing here some major advantages of SOA

1: Detailed Fund Information

Statement of account(SOA) gives detailed information with respect to transactions in a particular scheme, and provides all such details including the current investment value of the individual's folio, load charges etc. which are not given in a demat account.

2: Good for Liquid Funds

When it comes to liquid funds, holding units in SOA mode is advantageous as the crediting and thereafter the redemption of units by way of debiting takes time in case of demat format as it is executed at the DP's end.The liquid funds held in SOA format facilitate buying and selling on the same day. Many large investors park money in a liquid fund for overnight duration only. If you buy liquid funds before 2pm, you get the day before’s net asset value. And if you sell the same units before 3pm on the same day, you will get money the next day, at previous day’s (today’s) net asset value. The delay and difficulty in reconciling the books on a daily basis is also the reason why daily dividend plans of liquid funds are also not available in demat mode. There is no such problem if you hold units in SOA format. 

3: Zero Brokerage

Holding mutual fund units in demat form results in more intermediaries. First, there will be a demat provider, then the clearing house, next the bank and lastly the stock exchange. This will automatically make transactions costlier. Transactions through brokers involve a yearly demat fee of Rs 300-500 and a brokerage every time you transact. The brokerage could be more than 0.05 per cent per transaction. There is no brokerage involved  in SOA Format.

4: Multiple Folios, SWP etc

You cannot have multiple folios and use options such as systematic withdrawal or systematic transfer and daily, weekly or fortnightly dividends when in demat format. Its default in SOA Format. Besides, schemes of not all fund houses are available on demat exchange platforms. For instance, on the NSE, schemes of only 30 out of 43 fund houses are available, while only 29 fund houses are linked to the BSE.

5: Joint Account

If someone wishes to hold some mutual funds jointly with their spouse and some on single holding basis then they should have a separate demat account for holding the same jointly and on single basis. In SOA Format, this is a default feature and investor has option to have different joint holders.

6:Will

It is quite likely that an individual would like to bequeath a part of his holdings to his or her spouse and rest to the children. In such situations holding mutual funds in demat form can give rise to more difficulties and thus jeopardize the financial planning perspective of the person.In SOA format investor has option to have different nominee for each mutual fund folio.

7:Advisory Services

Mutual fund demat accounts do not offer any advisory services. It is just a platform where one can buy and sell mutual funds smoothly albeit some cost.

For your any further query and mutual fund advisory you may contact us with your contact details we will be happy to assist you.