Summary of "NISM VA Mutual Fund Chapter 9 - INVESTOR SERVICES | 2024 - New Syllabus | #nism5a #nism"
NISM VA Mutual Fund Chapter 9 - INVESTOR SERVICES | 2024 - New Syllabus
Key Finance-Specific Content Summary
1. Mutual Fund Basics & New Fund Offers (NFOs)
- NFO Definition: First-time offer of a new mutual fund scheme by an Asset Management Company (AMC).
- NFO Pricing: Units are offered at a fixed face value of ₹10 during the NFO period (typically 15 days).
- NFO Process:
- AMC decides investment objective and scheme details with inputs from Investment Officer and Marketing Officer.
- Scheme Information Document (SID) is prepared and approved by AMC Board and SEBI.
- NFO opens and closes within a fixed period; investors must subscribe during this window.
- After NFO closes, the scheme reopens as an ongoing/open-ended scheme with fluctuating Net Asset Value (NAV).
2. Open-Ended vs. Close-Ended Schemes
- Open-Ended:
- Scheme remains open for continuous purchase and redemption post-NFO.
- NAV fluctuates daily based on market conditions.
- Close-Ended:
- NFO period only; scheme closes after a fixed maturity period.
- Units can be traded on secondary markets but no new purchases/redemptions during the closed period.
3. Plans and Options in Mutual Funds
- Plans:
- Direct Plan: Investor invests directly with AMC, no intermediary, lower expense ratio → higher returns.
- Regular Plan: Investment routed through distributors/advisors who receive commissions → higher expense ratio.
- Options:
- Dividend Payout: Dividends paid out to investor’s bank account; NAV drops by dividend amount (ex-dividend NAV).
- Dividend Reinvestment: Dividends reinvested to buy additional units, increasing total units held.
- Growth Option: No dividends paid; NAV reflects capital appreciation, typically highest NAV among options.
4. Financial Transactions in Mutual Funds
- Types:
- Initial Purchase (first investment in a scheme).
- Additional Purchase (top-up investments).
- Redemption (selling units).
- Switch (transfer of investment from one scheme to another within same AMC).
- Systematic Transactions:
- SIP (Systematic Investment Plan): Regular periodic investments to average out market volatility.
- SWP (Systematic Withdrawal Plan): Regular periodic withdrawals, useful for retirement income.
- STP (Systematic Transfer Plan): Periodic transfer of fixed amounts from one scheme to another, e.g., from debt to equity.
5. Account Statements & Investor Services
- Monthly Account Statement: Issued if transactions occur during the month.
- Annual Account Statement: Issued if no transactions in last 6 months, showing holdings and NAV.
- Consolidated Account Statement: Combines all mutual fund investments across AMCs linked to investor’s PAN, sent monthly via email.
6. KYC & Compliance
- KYC (Know Your Customer): Mandatory for all investors, including minors (via guardian).
- Documents Required: PAN card (mandatory), address proof (Aadhar, passport, utility bills, etc.).
- KYC Process: Identity and address verification to comply with Anti-Money Laundering (AML) laws.
- Power of Attorney: Can authorize others to transact on investor’s behalf; such persons also need KYC.
7. Nomination & Joint Holders
- Up to 3 nominees can be registered with specified percentage shares.
- Nomination helps transfer proceeds to nominees upon investor’s death.
- Joint holders allowed (up to 3 holders per folio), with one primary holder.
8. Demat Facility
- Mutual fund units can be held in physical or demat mode.
- Demat mode preferred for ease of holding, transfer, and safety.
- Depositories: NSDL and CDSL.
9. Payment Modes & Cut-Off Timings
- Payment modes include Internet Banking, ECS (Electronic Clearing Service), UPI, cheque, demand draft, wallets, debit/credit cards.
- Cut-off times:
- Equity and debt funds: 3:00 PM for purchase, redemption, and switching.
- Liquid funds: 1:30 PM for purchase; 3:00 PM for redemption/switch.
- Transactions received after cut-off processed next business day, impacting NAV applied.
10. Bonus Units & Rights Issue
- Bonus units issued free of cost to existing investors in a fixed ratio (e.g., 1:3 means 1 bonus unit for every 3 held).
- Rights issue allows existing investors to buy additional units at a specified price, usually at a discount.
Methodologies / Frameworks Shared
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NFO Investment Process: AMC decides scheme objective → prepares SID → SEBI approval → NFO opens for 15 days → investors subscribe at ₹10/unit → scheme reopens post-NFO with NAV fluctuation.
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Choosing Plans and Options: Decide between Direct vs Regular plan (cost vs advisory). Choose Growth vs Dividend Payout vs Dividend Reinvestment based on income needs and tax considerations.
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Systematic Investment Plan (SIP) Calculation Example: Invest fixed amount monthly → units allotted = investment amount / NAV on date → averaging effect over market cycles.
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Nomination Percentage Allocation: Assign % shares among nominees summing to 100%; if none assigned, equal distribution assumed.
-
Bonus Units Calculation: Bonus units = (existing units / bonus ratio); no additional payment required.
Key Numbers & Timelines
- NFO Period: Typically 15 days.
- Unit Face Value at NFO: ₹10.
- Cut-Off Times:
- Equity/Debt funds: 3:00 PM
- Liquid funds: 1:30 PM (purchase), 3:00 PM (redemption)
- Nominees: Maximum 3 per folio.
- Bonus Ratio Example: 1:3 (1 bonus unit per 3 units held).
- SIP Example: ₹1000 monthly investment with NAV varying ₹9-₹12 → units allocated accordingly.
Recommendations & Cautions
- Direct Plans preferred for higher returns due to lower expense ratios.
- Growth option preferred over dividend for long-term wealth creation.
- Understand cut-off times to optimize NAV application and transaction timing.
- KYC compliance is mandatory before investing.
- Nomination should be done to secure investment proceeds for heirs.
- Demat holding recommended for ease and safety of units.
- Systematic plans (SIP, SWP, STP) help in disciplined investing and withdrawals.
Disclosures / Disclaimers
The video is educational and aligned with the NISM Mutual Fund Distributors Certification syllabus. No explicit financial advice is given; viewers are encouraged to understand concepts and apply judgment. The presenter emphasizes exam preparation and understanding of mutual fund investor services.
Presenter / Source
- The video appears to be by an educator preparing viewers for the NISM Mutual Fund Distributors Certification (NISM VA) exam.
- The presenter is not named but provides detailed syllabus-aligned explanations and practice questions (MCC).
- The content is tailored for Indian mutual fund investors and distributors.
Summary
This video covers Chapter 9 of the NISM VA syllabus focusing on investor services related to mutual funds. It explains the structure and process of New Fund Offers, open-ended vs close-ended schemes, plans and options (direct/regular, dividend/growth), financial and non-financial transactions, KYC requirements, nomination, demat holdings, payment modes, cut-off timings, systematic investment plans, and bonus/right issues. The video also includes exam-style questions and answers to help learners prepare for certification.
Category
Finance
