The Hindu Business Line : Mutual funds pushing for `master folios'

MULTIPLICITY of transactions in various schemes is prompting mutual funds to increasingly push for master folios, a concept that is being pursued by some influential fund houses.

The plan allows investors to maintain all their holdings in various schemes in a single folio, provided certain conditions are fulfilled. Fund executives in charge of client relations call this a step towards providing more convenience.

Such a "master folio" enables a unit holder to transact in all schemes he or she has invested in. It can be further used for making fresh investments and record changes in address or bank details.

It is not easy for investors to note the different folios that may be allotted to them for purposes of quoting during future transactions, said Mr Ravi Sharma, head of marketing at Birla MF, which in fact provides investors with unique numbers that are 10-digit long.

Other funds also argue in favour of merging folios, citing the benefits of the same. An existing unit holder running several folios simultaneously can expect to get all information in one account statement (which will contain data on current unit balances and the latest market values) if all accounts are merged under a single folio. A new investor entering a Birla MF scheme, for instance, (one who is assigned a 10-digit folio number), is expected to quote it for transactions in any scheme.

The practice is also being encouraged by other players in the MF sector. Templeton is of the view that it simplifies matters to a large extent, especially because it leads to the clubbing of existing sub-folios or sub-accounts.

"We have already tried to simply the process of application for investors," said Mr Rajiv Vij, head of Templeton in India, adding that the market has appreciated the efforts put in by the fund houses in this direction.

Distributors also feel that master folios have become necessary in the present scenario, marked as it is by a huge number of transactions. Investors, given the current volatile market conditions, are constantly taking redemptions, making fresh investments and switching from one plan to another. There are also instances of changes in bank mandates.

"The breadth of the market is increasing as more money is flowing in and out of funds. The number of schemes vying for this money is larger than ever.

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