The importance of a mutual fund account statement

Click on the link below to read my article in Mid-day Mumbai edition today:

http://epaper.gujaratimidday.com//epaperpdf/gmd/20072015/20072015-md-gm-11.pdf


The English translation is as under:

“Can you please provide me the information of your investments?” Asked the financial adviser to the client. The client answered: “I invested so much in XYZ mutual fund, this much in ABC mutual fund, …, etc.” The adviser was not satisfied with the answer, as he wanted to know the current value of the investments.

The client was unable to understand the question, as they were talking on phone. The adviser suggested that they meet. He also requested the client to carry the account statements for the meeting.

How the adviser helped the client to know the value of investments?

When an investor invests in a mutual fund scheme, one gets an account statement. This statement looks quite like a bank statement in that it contains the record of various transactions the investor has done in the account as well as the current balance and any dividends one has received. The statement also contains some basic details of the investor and the mode of holding.

As far as the investor’s question in the discussion above is concerned, the account statement serves an important purpose. An investor can see the unit balance in the respective mutual fund scheme folio. Multiplying this unit balance with the current NAV of the scheme gives the current value of investments.

While how much money you invested is important to know, after a while, it is important to know how much money has been accumulated in this account.

An account statement, as mentioned earlier, also shows the cumulative value of the dividends paid by the scheme in this investment folio. This gives a good idea to the investor about how much Rupee returns one has made.

One should be careful to understand that the total returns one has got through the investments cannot be simply added as what one received few years ago cannot be equated with what one got now. The concept of “time value of money” is important for anyone interested in the study of investments and loans.

How often can one get an account statement?

Actually, any number of times. A mutual fund account statement is just a document that records the transactions and unit balance, it can be obtained from the office of the mutual fund company or the registrars any number of times one wants. There are no charges levied for this. Mutual fund companies also offer online services to the investors, which help an investor check the current value of investments anytime and from anywhere. Today, there are mobile phone applications also that help one check the current value of investments.

Investing in mutual funds is quite simple. Checking the current value of investments is even simpler.

Amit Trivedi

The author runs Karmayog Knowledge Academy. Recently, Amit has authored a book titled “Riding the Roller Coaster – Lessons from Financial Market Cycles We Repeatedly Forget”. The views expressed are his personal opinions.