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Experts answer questions about fund transfers and donations


Uday Dhoot, Partner, Venn Wealth, and Gaurav Gupta, Director, G-Cube Investments, on a CNBC-TV18 special, MF Corner, answer some of the questions sent by viewers.

Question 1 – Can mutual fund units be offered by the first holder to the second holder without redemption / switch?

Responding to the question, Dhoot said the rules for donating are very clear – it’s not allowed. The first holder cannot donate mutual fund units to the second holder or to any other person.

If these shares are in demand, the first holder can make a transfer, which would be like a financial transaction.

The only option is to sell the units. This is the only way to transfer the units; there is no other way to transfer units from one person to another.

For example, I have certain shares in my demat account and another person “B” wants to buy them back from me. I can sell them to B and get B’s money separately from my bank account without going through the traditional market sale etc. This kind of transaction can be done. Thus, the first owner can sell the mutual fund units to anyone else and the transfer is made. Transfer is permitted if the units are in demat form but donation is not permitted, whether in demat or physical form.

Query 2: Should I switch from the MOSL Nifty Index plan to Nifty?

Gupta said that when it comes to Bank Nifty’s query versus actual Nifty, he should analyze the person’s wallet and see their holdings as sector funds, such as bank or pharmaceutical funds, always carry more risk. raised. So the Nifty Index plan is a better option, he said.

If you look at past performance, the five and ten year average returns are very similar for the Bank Nifty as well as the Index. But in fact, last year the banking index outperformed the Nifty. Thus, the investor can speak of a period of one or two years when the returns were a little lower than those of the Nifty index.

Question 3- Do I have to switch from Kotak Flexicap fund to HDFC Flexicap?

Dhoot said changing funds on a one-year performance basis is not a good idea and, in essence, results in more taxes, more costs for the end investor and does not necessarily result in a loss. greater long-term outperformance.

Kodak Flexicap and HDFC Flexicap over three and five year periods show similar returns. Over three years, both reached a CAGR of almost 21%, while over five years the CAGR was over 15%. There is hardly any difference to discuss, he said.

So at different times, there are quarters that go well for fund A, and others that go well for fund B. Over the course of those three or four quarters, you don’t have to make a decision to portfolio change. If the overall portfolio is well diversified in different types of strategies, in different market capitalizations, limiting changes is the best strategy, as the investor will avoid incurring additional expenses, he stressed.

For the investor today, redeeming this fund would mean paying capital gains tax and then investing the rest of the money, rather than just letting that money come together on its own. If you have more money to come, make sure your allowances are appropriate.

So net-net, don’t change funds, just because the performance in any given year hasn’t been great, Dhoot said.

For more answers to the different questions, watch the video

(Edited by : Thomas abraham)

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