Home / Opinion / Small details, big difference

The other day, a colleague of mine asked me to go through her mutual fund (MF) portfolio; she said she had a few MF schemes and wanted my opinion on what to keep and what to throw out. She said she had a few schemes of “ICICI Prudential" and was wondering what to do with them. It’s only when I looked at the account statements that I realized that the company was ICICI Prudential Life Insurance Co. Ltd and the concerned “scheme" was actually a unit-linked insurance plan (Ulip) and not an MF scheme at all.

This set me thinking. Before we start worrying about performance, we should get some basic hygiene in place—understanding where we invest, what’s it about, appreciating the risk and reward levels, and so on. As we usher in 2014, it’s a good idea to adopt some basic maintenance practices to get a better handle over your investments.

Maintain a file

Keep your MF account statements in a separate file. Segregate them according to fund house. I use colour paper (preferably darker shades) to separate fund houses, so that it’s easy to identify where one fund houses’ records end and the other one’s begin. Always keep the first account statement and then, ideally, the past two years’; anything more than that is unnecessary. In any case, your account statements are available online so you can get them anytime you want.

You can also maintain your statements in your email account. Make separate folders, again according to fund house, and store e-statements there.

Once you have stored your statements properly, you will have a fair idea of how many investments you have across MFs. Update all your folios with your correct mobile phone number and email address. This will help you track your investments better; your fund house keeps you updated over email and mobile phone on things such as redemption requests, systematic investment plans (SIPs), and more. You can even get your account statements in your email whenever you want. If you have very old MF investments, especially from the days when unit certificates (like share certificates) were issued instead of the present day account statements, try and ascertain such investments and ensure you have your holding details, including the certificates themselves. Do the know-your-client (KYC) process for these old folios.

Once all your folios are updated with your email address and phone numbers, it is also easier to get a consolidated account statement (CAS) from the registrar and transfer agent’s (R&T) website. A CAS is a great tool to use if, at any point of time, you want the latest update on all your MF investments—your recent transcations, latest value, etc. But CAS only pulls the details of the folios that are tagged to a particular email address. Also, once you key in your details, your CAS goes to that same email address to ensure its safety. That’s another reason to ensure that all your folios have updated contact information. Save your CAS the same way you save your account statements.

Mumbai-based financial planner Kavitha Menon suggests that we should maintain a single email address across MFs, KYC, insurance, tax and bank records. You could write to the companies to change your contact details so that you have the same email address in all investment records.

Consolidate folios

Consolidate your folios within fund houses. Some planners suggest that you separate the folios for SIPs and one-time investments (within a fund house). Or, you could have just one folio per fund house. Note that all schemes within the same folio must have the same holding pattern (first holder, second holder, etc.) and the same nomination. The fewer the folios, the more manageable will your portfolio become. That reminds me, nominate someone for all your MF investments. It may not matter to you much, but it will make life easy for your heirs.

Keep the communication

Make a habit to read your fund house’s communication. Financial planners complain of having come across customers who have 50-60 unopened letters from fund houses at any given point in time. Save the receipt after you submit your application form till your fund house sends you the first account statement. Likewise, if you apply to start or stop an SIP, save a copy of the acknowledgement you get for some time. This one’s a big problem: keeping track of your MF agent. Years later, when you go to sell your funds, you may realize that you had bought some units through some other distributor years back but are not in touch with her anymore. Your new agent will not be able to redeem your investments or even service them because your investments would still be tagged to your original distributor’s code. For folios among those that are at least tagged to an email, you could fish out their names by visiting https://tinyurl.com/kvezjug; opt for the ‘detailed’ CAS.

Being organized can make MF investing smoother. Happy 2014!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Recommended For You
Get alerts on WhatsApp
Set Preferences My ReadsWatchlistFeedbackRedeem a Gift CardLogout