Ask our experts: May 2023

Investment queries

My father started investing in three mutual fund ELSS as direct plans three years ago. In addition, he has a direct equity plan (no demat account) with me listed as the only nominee.

Now after his death, I would like to redeem the units of these schemes. Is it linked to the NAV at that time? I would also like to know if I can continue investing in these schemes in my name. I want to continue investing for at least 15 more years. Is there any procedure for this?

-Naveen K, Delhi

If the nomination is registered, the procedure for getting the transmission of units in your name is simple. Once the units are in your name, you may choose to continue with the investments or decide basis your requirements.

The following are the documents needed for transmission in the case of nominee is registered:

  • Transmission Request Form (Form T3) for Transmission of Units in favour of the Nominee(s).
  • Death Certificate of the deceased unitholder(s) in original OR photocopy duly attested by a Notary Public or a Gazetted Officer.
  • Copy of PAN Card of the Nominee
  • KYC Acknowledgment OR KYC Form of the Nominee
  • Cancelled cheque with the Nominee’s name pre-printed OR Copy of the Nominee’s recent Bank Statement/Passbook (which is not more than 3 months old).

As a risk mitigation measure, most fund houses follow certain threshold values, while submitting the request for transmission of units, beyond which the nominee (the one claiming the units) would be required to submit additional documents, if any needed. The same can be enquired with the respective AMCs.

What are the differences between global fund and international fund? Please explain advantages and disadvantages. Please recommend the top funds in these two categories.

-Alex Mathew, Mumbai

Global funds typically have mandates for investing in securities and other financial instruments all around the world, including the nation where the investor resides. The investing mandate of International funds, however, spans across all countries except the investor’s home country.

Investors choose Global funds primarily to diversify against country-specific risk, but without excluding their own country. International funds are chosen by the set of investors looking for diversification outside the domestic investments.

The main advantage of investing in international or global fund(s) is the geographical diversification it provides and one’s investments are not restricted to a single economy, hence opening up the possibilities to benefit from the growth of other economies / countries.

A major disadvantage could be cited to the risks in foreign economy or markets, higher transaction costs, currency volatility, liquidity risk, etc.

At present we do not have a specific recommendation on these categories.

I have investments in AXIS Mutual funds (ELSS, Focused 25 direct plan, blue chip). Recently there have been several recent reports about the AXIS fund.

What does “front running” mean? How will it impact my investment? Should I continue investing? Please provide advice.

-Ajaz M, Hyderabad

Front running is an activity, where a broker or fund manager has exclusive information about the securities / stocks, that are about to be purchased or sold at the scheme level and make use of such information for their personal benefits.

As available in the public domain, few fund managers of the mentioned fund house, said to have passed on certain price sensitive information to brokers who in turn gave hefty money to them (allegedly). Fund house has found the irregularities in February 2022 and have initiated action against those involved in the practices, by removing from the service of company.

At the outset, front running is not a good practice, and it is in violation of regulations. In this case, since the fund house has acted upon the errant individuals and is in constant communication with the public and other stake holders, we feel investors can continue to hold on to the investments for some more time to see how the schemes are performing.

Also, Axis Long term equity (ELSS) and Axis Bluechip funds are in our current recommendations.

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