Investors in Mutual Funds to comply with 'KNOW YOUR CLIENT' (KYC)

What is KYC?? KYC means Know Your Client

Guidelines issued by Securities and Exchange Board of India under The Prevention of Money Laundering Act, 2002 (�PMLA�) requires Mutual Funds to follow enhanced know your Client (KYC) norms. This FAQ is only meant to clarify certain questions relating to enhanced KYC procedures. Please contact your distributor/ Concerned Mutual Fund for further clarifications.
W.E.F. February 1, 2008 Investors in Mutual Funds investing Rs. 50,000/- and above are required to comply with Know Your Client (KYC) norms under the Prevention of Money Laundering Act 2002 (PMLA).

KNOW YOUR CLIENT (KYC) :

In order to comply with regulatory provisions under the Prevention of Money Laundering Act 2002, Rules issued thereunder and related guidelines/circulars issued by SEBI, KYC formalities are required to be completed for all Unit Holders, including Guardians and Power of Attorney holders, for any investment (whether new or additional purchase) of Rs. 50,000 or more in mutual funds. For the convenience of investors in mutual funds, all mutual funds have made special arrangements with CDSL Ventures Ltd. (CVL), a wholly owned subsidiary of Central Depository Services (India) Ltd. (CDSL)). DOCUMENTS AND INFORMATION TO BE PROVIDED BY INVESTORS: Investors in mutual fund schemes have to provide: (1) Proof of Identity (2) Proof of Address (3) PAN Card (4) Photograph WHERE TO COMPLETE THE FORMALITIES: Investors could complete the formalities by submitting the KYC form (Click here for Individual KYC Form) and relevant documents at the Points of Services (POS). (Click here for List of POS) To start with, these POS will be the select branches / offices of mutual funds, registrars and select branches of some distributors. The application form for complying with KYC will be available from these POS. The application form could also be downloaded from the websites of all mutual funds (Click here for list of Mutual Funds with websites) and CVL www.cvlindia.com. Investors could contact offices of mutual funds, registrars and mutual fund distributors (ARN Holders) for further details and assistance. What is a KYC Application Form? A KYC Application Form has been designed for Individual and Non-Individual Investors separately. The soft copy of these KYC forms will be made available on the website of all mutual funds, AMFI and Central Depository Services (India) Limited (CDSL). You may also approach your distributor for a form. It is important to read the instructions printed on the KYC Application Form while filling-up the form. Source: Amfi india (http://www.amfiindia.com)

How you can Invest in Gold ETF Funds

Give your investments the power of gold.

Gold’s most valuable contribution to a portfolio, lies in the fact that it has a low correlation with most other assets. This is due to the fact that the factors affecting the price of gold differ from those that influence the price of most other asset classes.

What is Gold ETF?

A Gold ETF is an ETF whose assets are invested in gold bullion with the objective of generating returns that are in line with the performance of gold (and gold related instruments including derivatives – as and when permitted by SEBI) subject to tracking errors.

How do Gold ETFs differ from physical gold?

Unlike physical gold, Gold ETFs are held in demat / electronic form and can be traded on a stock exchange just like buying and selling stocks.

How are Gold ETFs better than physical gold?

Gold ETFs score over physical gold, because they eliminate the hassles and drawbacks of physical gold (e.g. impurity risk), are more tax-efficient and allow you to invest in small amounts.

How are Gold ETFs better than Gold Funds?

Gold ETFs are better than Gold Funds because in comparison to Gold Funds, Gold ETFs are less volatile. While gold ETFs invest in physical gold, Gold Funds invest in equities of gold mining companies; and gold stocks are more leveraged to the gold prices than the gold itself.

What is the purity of the underlying gold?

Gold ETFs invest in standard gold bullion with purity (fineness) of 995 parts per1,000 (99.5%) or higher.

How are Gold ETFs taxed under Income Tax Act, 1961?

Gold ETFs schemes are treated like non-equity mutual funds for the purpose of taxation.So, the gains attract short term capital gains (STCG) tax if held for less than one year and long term capital gains (LTCG) tax if the period of holding is more than a year.

(You can check this on :Tax treatment for Gold ETF)

What are main benefits in investing in Gold ETFs Fund?

Assured purity

No storage or security concerns

Easy liquidity

Trade in small amounts

Why should an investor invest in Gold ETF? No worry on adulteration Gold provides diversification to the portfolio Gold is considered as a Global Asset Class Gold is used as a Hedge against Inflation Gold is considered to be less volatile compared to equities Held in Electronic Form Store of value Extremely Liquid

Advantages of Investing in Gold ETFs Potentially cheaper to have price exposure to gold price as compared to other available avenues Quick and convenient dealing through demat account No storage and security issue for investors Transparent pricing Taxation of Mutual Fund Can be traded on stock exchange like buying / selling a stock Ideal for retail investor as minimum lot size to trade is one unit on secondary market NAV of a unit will track price of approximately ½ or 1 gram of gold Investor Requirements for trading in Gold ETF Trading account with a stock exchange broker Demat account as Gold ETF can be traded only in demat form

Which Amc's offer Gold ETF Funds?

1. HDFC Gold Exchange Traded Fund 

2. ICICI Prudential Gold ETF NFO or ICICI Gold Exchange Traded Fund

3. Reliance Gold Exchange Traded Fund

4. Kotak Gold Exchange Traded Fund
5. Gold Bench Mark Exchange Traded Fund

6. UTI Exchange Traded Fund
7. Quantum Gold Fund Exchange Traded Fund

 Also Refer:NSE Codes for Gold ETF funds (Exchange Traded Funds)

All Mutual Funds Schemes will now be listed in Stock Exchange

Sebi wants listing of all mutual fund schemes. Securities and Exchange Board of India (Sebi) is planning to make listing of all schemes mandatory. These will include all debt, equity, open-ended and close-ended schemes.
The aim of this to now transacting in mutual funds in any scheme will be as easy as investing in shares or stocks.

According to Sebi officials, the basic reason for listing all mutual funds is to give investors another option. Also, costs will come down further.


However, Sebi’s decision has been delayed by a few problems. For one, there are over 2,000 schemes in the market. Then, there are listing costs. When listing of fixed-maturity plans (FMPs) was made mandatory last year, cost was an issue.

At present, the cost of listing FMPs depends on assets under management. The cost is Rs 16,000 for funds that have AUM up to Rs 100 crore, for the first six months. The cost of listing exchange-traded funds is the same. “The listing cost of schemes may be too high, especially for smaller fund houses. It should not be a big deal for large players,” said a source.

Trading of mutual funds at the exchanges has not really taken off. Monthly volumes on the BSE, the bigger player in this segment, rose from Rs 18.80 crore to Rs 78.85 crore in July. The reason: settlements take place directly between fund house and investor. That is, units of a mutual fund are deposited directly into the demat account of an investor.

When trading through the exchanges, things are different. In comparison, in the case of stock trading, the broker takes delivery of shares.

So, if the cheque of a mutual fund investor bounces, the broker may have to chase an investor. “It is this lack of control at the broker’s end that does not encourage them to aggressively promote mutual fund trading. We are looking at a process whereby units can be delivered through brokers,” said an exchange official.

Source: Business standard
http://www.business-standard.com/