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Transfer of Mutual Fund Units: Everything You Need to Know
Transferring mutual fund units is a process that allows investors to move their holdings from one broker to another or transfer ownership to another person. If you’re wondering how to transfer mutual funds from one broker to another, this guide will help you understand the steps, rules, and scenarios where mutual fund transfers are possible.
Can Mutual Funds Be Transferred?
Yes, mutual fund transfer is possible under specific conditions. Transfers usually happen in the following cases:
- Shifting funds from one broker (demat account) to another.
- Transferring ownership to another investor as a gift.
- Moving units between family members due to inheritance or legal proceedings.
How to Transfer Mutual Funds from One Broker to Another
If you hold mutual funds in a Demat account, you can transfer them from one demat to another using the Depository Participant (DP) process:
1. Obtain a Delivery Instruction Slip (DIS) from your current broker.
2. Fill in the target DP details (new broker’s DP ID and client ID).
3. Submit the form to your existing DP for processing.
4. Units get transferred to the new DP within a few business days.
For non-Demat holdings, you need to redeem and reinvest the funds.
Can Mutual Funds Be Transferred to Another Person?
- Gift Mutual Funds – Some mutual funds allow you to transfer units as a gift to another investor. This is done by submitting a transfer request along with KYC details of the recipient.
- Transfer Due to Inheritance – If the original investor passes away, the nominee or legal heir can claim the mutual fund units by submitting proof of inheritance to the fund house.
Things to Keep in Mind
- Transfers may involve exit loads or capital gains tax if units need to be redeemed first.
- Not all mutual funds allow gifting or third-party transfers.
Conclusion
If you’re looking to switch brokers or transfer ownership, understanding how to transfer mutual funds from one broker to another is essential. While Demat-based transfers are straightforward, direct transfers to another person require additional approvals. Always check the fund house’s policies before initiating a transfer to avoid any unexpected issues.
For further details click here: Association of Mutual Funds in India
Disclaimer:
The information is for general purposes only and not an investment advice. Readers should seek professional advice before taking any investment related decisions.
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.
FAQ Section
Can mutual funds units be transferred from one DP to another?
Yes, mutual funds can be transferred between DPs if held in a Demat account. The process involves obtaining a Delivery Instruction Slip (DIS) and providing details of the new broker’s Depository Participant (DP) ID.
How can I transfer mutual funds from one DP to another?
If you hold mutual funds in Demat form, follow these steps:
1.Request a DIS (Delivery Instruction Slip) from your current broker.
2.Enter the new DPsp’s DP ID and client ID.
3.Submit the completed DIS form to your existing broker.
4.The units will be transferred to the new broker within a few business days.
For non-Demat holdings, you may need to redeem and reinvest through the new broker.
Can I transfer mutual funds units to another person?
Yes, but it depends on the fund house’s policies. Mutual funds can be transferred in the following ways:
- Gift Transfer – Some mutual funds allow gifting units to another investor by submitting a transfer request along with the recipient’s KYC details.
- Inheritance Transfer – In case of the investor’s demise, the nominee or legal heir can claim mutual fund units by submitting inheritance documents.
Do all mutual funds allow transfers between individuals?
No, not all mutual funds allow gifting or third-party transfers. It is advisable to check the specific fund house’s policy before initiating a transfer.
Are there any charges involved in transferring mutual funds?
- Transfers between DPs may not incur charges if done through a Demat account.
- If the units need to be redeemed and reinvested, exit loads and capital gains tax may apply.
Can I transfer mutual funds without a Demat account?
If the mutual fund units are held in non-Demat form, a direct transfer is usually not possible. You may need to redeem the existing units and repurchase them under the new broker or recipient’s name.
What happens if my broker does not support a mutual fund transfer?
If the new broker does not support the mutual fund, you may need to:
- Continue holding the units with the existing broker.
- Redeem and reinvest under the new broker’s platform.
How long does it take to transfer mutual funds?
For Demat transfers, the process typically takes a few business days, depending on the depository participant. Direct transfers to another individual may take longer due to documentation and approval processes.
Is there a tax implication when transferring mutual funds?
- If mutual fund units are transferred as a gift, there may be tax implications for the recipient.
- If units are redeemed before transfer, capital gains tax may apply.
How can a nominee claim mutual fund units in case of the investor’s death?
The nominee or legal heir must submit:
- Death certificate of the investor.
- KYC documents of the nominee/heir.
- Legal inheritance proof (if applicable) to claim ownership of the mutual fund units.
Nomination will be as per SEBI/AMFI guidelines.
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Disclaimer
An Investor Education And Awareness Initiative
Visit https://www.hdfcfund.com/information/key-know-how to know more about the process to complete a one-time Know Your Customer (KYC) requirement to invest in Mutual Funds. Investors should only deal with registered Mutual Funds, details of which can be verified on the SEBI website (www.sebi.gov.in/intermediaries.html). For any queries, complaints & grievance redressal, investors may reach out to the AMCs and / or Investor Relations Officers. Additionally, investors may also lodge complaints directly with the AMCs. If they are not satisfied with the resolutions given by AMCs, they may raise complaint through the SCORES portal on https://scores.sebi.gov.in/scores-home/. SCORES portal facilitates investors to lodge complaint online with SEBI and subsequently view its status. In case the investor is not satisfied with the resolution of the complaints raised directly with the AMCs or through the SCORES portal, they may file any complaint on the Smart ODR on https://smartodr.in/login.
