Dematerialization of Mutual Fund Units!!

Dematerialization of Mutual Fund Units means holding mutual fund units in demat form. SEBI now allowed mutual fund investments to be held in dematerialized form. It means that investors will have the option to convert their existing mutual fund investments into dematerialized form and buy/sell units through stock exchanges.

Investors desirous of receiving the allotment of units in dematerialized (“demat”) form under various options of the Scheme(s)/Plan(s) offered by the Fund will now have an option in the subscription form to provide their demat account details. Currently, the option to subscribe/hold units in demat mode is not available under the Daily/Weekly/Fortnightly Dividend Option(s) and for Systematic Investment Plan (SIP) transactions.

A demat account for mutual funds will be similar to the one for shares. You can subscribe to mutual fund units through your stock broker using the stock exchange platform. On subscription, the asset management company (AMC) or Registrar and Transfer Agent (RTA) will credit the mutual fund units to your demat account.


For existing mutual fund holdings, you have to obtain a conversion request form from your Depository Participant (DP). After verification , the AMC or RTA will credit the mutual fund units into your demat account. It enables you to subscribe to mutual funds units through a stock broker, using the stock exchange platform.


It is to be noted that the demat holding will entail a charge. It may either be a flat fee based on a time period or may be linked to the Assets Under Management (AUM). The brokerage and demat transaction fees could vary with the broking firm, depository and DP. This apart, while trading in equity mutual funds through exchanges, you will have to pay the securities transaction tax (STT) as well.