Rushabh Desai, AMFI registered mutual fund distributor replies, “A mutual fund does not deduct the expense ratio all at once at the time of purchase. It is deducted on a daily basis after calculating its per day expense. The annual expense ratio is divided by the number of trading days of the year and is charged on the closing gross NAV. For example, if there are 252 trading days in a particular year, the 2% expense ratio is divided by those number of days to acquire the per day expense which is 0.0079%. This percentage is charged on the closing gross NAV of the mutual fund. Now assuming the amount of Rs 20 lakh remains constant for the whole year, you would be paying Rs 40,000 to the AMC at 2% expense ratio. However, the NAV keeps fluctuating daily and there are positive and negative valuation days. The higher number of positive value days, the greater the expense and the lower number of positive value days, lesser the expense you pay.”
A relative cannot sign documents due to a neurological problem. His broker has deactivated his trading account as he could not sign a required power of attorney. Can we submit an application with thumb impression or an affidavit, as thumb impressions are now linked with Aadhaar?
Prableen Bajpai, Founder FinFix Research & Analytics replies, “A trading account is deemed inactive if no trades are carried out for at least 12 months. Such accounts are only allowed to trade after completion of the reactivation process, which involves ‘redoing’ of the KYC, including inperson verification. Recent regulations allow IPV over the webcam. You can try doing the re-KYC online to activate the account. Once the account is activated, a Delivery Instruction Slip has to be submitted every time a transaction of sale is done if the POA is not mapped to the account. To make this process easier, CSDL has introduced a process of generating TPIN for E-DIS transactions using a registered mobile and email. These online mediums can be used to conduct the demat operations till the thumb impression is registered. The exact process and documentation for registration of thumb impression can vary across organisations. Broadly, the account holder will have to visit the office of the Depository Participant and produce a valid proof of identity along with a request form (with notarised thumb impression), medical certificate and verified original documents. Please get in touch with the broker for more information and guidance.”