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NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Operational Aspects of Investment Management

Mr Iyer, a client of an investment adviser, wants to know how his mutual fund holdings are recorded when he invests through a demat account. Which statement is correct?

Mutual fund units held in demat form are credited to the investor's own demat account, and the depository provides the statements. They are not held in the adviser's name or limited to paper certificates, so the demat account record is the correct statement.

  1. AUnits held in demat form are credited to his demat account and statements come from the depositoryCorrect
  2. BUnits are held only as paper certificates by the AMC
  3. CUnits are recorded in the adviser's own name for convenience
  4. DUnits cannot be transferred to any other account once bought

Explanation

Units can be held in demat form, credited to the investor's account with a depository participant, with statements issued by the depository. Holding in the adviser's name would be improper, and paper certificates are not the only option.

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