Mutual Fund: Nimesh Shah

Nimesh Shah, MD & CEO, ICICI Prudential Asset Management Company, answers your questions

Many fund houses say they are offering e-KYC or biometric KYC. What is it and how does it work? How do I benefit as an investor?

Through paperless, a biometric Know Your Customer (KYC) can complete the KYC process simply with a fingerprint scan and make transactions of any amount instantly. Visit the fund house's branch with your Aadhaar and Permanent Account Number (PAN). These branches will have a small device on which you have to give your thumb impression. The system then authenticates the fingerprint with Aadhaar records and no paperwork or additional signatures are needed.

This facility can help investors invest in MFs by simply using a fingerprint. It streamlines the key processes and minimises paper work while on-boarding investors.

Is it important to check the expense ratio of a mutual fund? How will it affect the returns?

Generally, the expense ratio of a fund with respect to peers in the category should be compared. A fund with lower expense ratio might offer higher returns. Consistent track record of the fund and pedigree of the AMC are other important parameters while selecting funds.

I have an ongoing Systematic Investment Plan (SIP) in an equity fund. Can I invest an additional amount in the same fund on a one-time basis? What is the procedure?

SIP offers an opportunity to investors whereby they can invest small portions of their investible surplus regularly, while simultaneously aiming to beat the market volatility. Over a period of time income increases, but SIP amount remains same. A SIP top-up is a tool that can be used to accelerate and reach goals faster. You can make a lump sum investment in the same fund, either through your financial advisor or by visiting the AMC's nearest branch.

Is it better to invest in an index fund or an exchange-traded fund (ETF)? What is the difference?
An ETF is made up of a basket of stocks of a particular index like the Sensex or Nifty. The portfolio of index funds also replicates stock exchange indices. But the key difference is that ETFs are available on the exchanges on real time Net Asset Value (NAV) basis. Index funds are bought and sold by the AMC at the end of the day's NAV. Investing through an SIP is one of the key benefit of index funds.

The views expressed are expert's own. Send your queries to yourmoney@bsmail.in