How Mutual Fund Utility Platform would benefit Investors?
How Mutual Fund Utility Platform would benefit Investors?
Last month, SEBI has launched MF Utility platform which is another new initiative in the mutual fund industry. MF Utility (MFU) is an innovative “Shared Services” initiative by the Mutual Fund industry under the aegis of the Association of Mutual Funds in India (AMFI), which acts as a “Transaction Aggregation Portal” through which a Mutual Fund customer is enabled to transact in multiple schemes across Mutual Funds using a single form/payment. What is the Mutual fund Utility Platform all about? Is this MF Utility is an alternative answer for investors who are struggling to invest in Direct Plans of Mutual funds? Is MF Utility platform is going to create a new revolution in mutual fund industry?
This post is based on request from Sadipkumar Patil on suggest a topic.
What is a Mutual Fund Utility Platform?
MF Utility is shared infrastructure of the AMC’s in India to reduce duplication and increase efficiency, thereby reducing cost and providing customer convenience. The MF Utility platform is an online transaction aggregator platform for investors who can invest in multiple schemes across multiple AMC fund houses through single common transaction form. Even for distributors it provides ease of transaction through a single window for their investors. Means you can invest through distributors or you can invest in direct plans through a single platform in all schemes.
How does MF Utility work exactly?
- You need to visit mfuindia.com website
- Register for Common Account Number (CAN). You can download CAN form here. This is the unique number to map all your investments in mutual funds through the MF Utility platform.
- Submit CAN registration form at POC centres specified by MFUIndia.
- You can submit MFU transaction form to gain access to MFUOnline portal.
- Once you get necessary login credentials, you can login to MFUOnline.com and do the transactions. You can invest in a single transaction or multiple transactions in a single click. You can pay one single payment for multiple MF schemes across multiple AMC fund houses.
What are the benefits of Common Account Number (CAN)?
- If you observe, CAN plays important role in MF Utility. CAN is a unique number to map all your MF investments and transactions done through MF Utility. All future transactions done through MF utility would be automatically mapped to your account using CAN. You can view a consolidated view with this.
- CAN helps investors to view all their details in one place. It includes KYC status, income details, mode of holding, nominee etc.,
- You need not fill account opening forms to invest in new mutual fund schemes at AMC websites.
- You need not update nominee for each and every scheme which we are doing it currently.
What are the transactions enabled through MF Utility?
- Common Account Number (CAN) registration for Investors
- Submission of documents to KRAs for KYC Registration for those investors who are seeking CAN creation
- Commercial transactions like Purchases, Redemptions and Switches
- Registration of Systematic Transactions like Systematic Investments (SIP) using a single Mandate, Systematic Withdrawals (SWP) and Systematic Transfers (STP)
- Non-commercial transactions (NCT) like Bank Account changes, facilitating change of address through KRAs etc. based on duly signed written requests from the Investors
Some of the FAQ’s on MF Utility Platform
Can an investor invest in direct plans through this MF Utility Platform?
Yes. An investor can invest through direct plans of Mutual funds through this platform. Since KYC is done once, you need not visit individual AMC Fund house websites and keep doing KYC every time. Also in case of change or new details updation for address, nominee etc.you need not visit AMC Mutual Fund House website to make the changes. You can do it in CAN under MF Utility Platform and details would get updated automatically. Then you can invest in direct plans through MF utility instead of visiting individual websites.
Can I link existing mutual fund portfolios / units to the MF Utility Platform?
No. Once you register for CAN, any future investments done through MF Utility, these are linked automatically. Existing portfolios / units cannot be linked.
Can I invest in SIP through the MF Utility Platform?
Yes. You can invest in the lump sum purchase or SIP through this MF Utility platform.
What are the charges for using the MF Utility Platform?
Currently this platform is free and no charges.
What are brokerage charges paid to Distributors?
There is no change in brokerage charges, if you are using MF Utility through your Mutual Fund Broker. Broker would get normal brokerage charges. Means you can invest as an individual or through a broker from MF Utility Platform who are registered with them. If you are investing in direct plans, brokerage charges would be NIL.
Can KYC non-compliant investors get a CAN created?
KYC compliance is compulsory for CAN creation. If an investor is not KYC compliant, MFU will facilitate KYC registration.
Can I invest in all mutual fund schemes across MF houses through the MF Utility portal?
AMFI has invited all mutual fund houses to participate through this. However majority of them have accepted it. You can invest in schemes offered from participating AMC’s. To know the list of participating AMC’s, you can check here.
What is a single payment option in the MF Utility platform?
You can invest through a single payment for schemes and across AMC fund houses. E.g. you can invest in HDFC Top-200, HDFC Mid cap opportunities, ICICI focused blue chip fund, Franklin India smaller companies fund etc. through single SIP payment of Rs 10,000. This amount would be debited from your account in a single transaction, however MF units would be credited as per the purchase/SIP details indicated by you in the portal.
Is this CAN transferable?
CAN is not transferable. In case of eventualities like demise of one or more holders in the CAN, the surviving holders have to request for transmission with MF Utilities India Pvt Ltd (MFUI) who shall do the needful.
Will an Investor be able to get his KYC Registration done through MF Utility?
MFU will not enable standalone KYC Registrations like a KRA. However, MF Utility (MFU) will facilitate KYC Registration for Investors along with the creation of CAN, i.e., it will facilitate the submission of KYC documents to KRA for KYC registration.
Conclusion: MF Utility is definitely a good initiative from SEBI/AMFI. Investors who have been struggling to invest in direct plans to do KYC/documentation from various AMC websites, now need not worry about it. I am yet to register and do transactions. However, I feel this would create a revolution in MF industry. Also, it is immaterial which mutual fund broker you are investing, just invest through the MF Utility portal through them, a consolidated view would be available in MF Utility.
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How Mutual Fund Utility Platform is going to benefit Investors