Mutual Fund Services:

Financial Mutual Funds launch schemes to cater to the need of the different categories of investors. They provide special services in addition to the returns which Mutual Funds offer to the investors. These services serve to attract the investors to invest their savings in Mutual Funds that meet their various needs. For example, regular income plan, savings and reinvestment plans, health insurance schemes, equity-linked savings plans for tax exemption purposes, etc.

Saving Scheme

Voluntary saving plan can be added to buy the units of Mutual Funds through which an investor can save on monthly or quarterly basis.

The important features of such plans are:

Through voluntary saving plans, the investor has the option and free will to contribute any sum at any time on regular or irregular basis.

Alternatively, savings could be made through contractual saving plans pursuant to some agreement envisaging a long-term investment plan binding upon the investor.

In the USA, these plans are quite in vogue and are under regulation of Securities Exchange Commission. These plans charge investors with substantially high front-end loads. An investor is required to pay commissions over the life of the contract recovered in advance in the initial year of the contract through initial installments in the form of front-end loads.

The investors who drop out from the contractual plans as stated in (b) above, remain at a disadvantage as the prepaid commission is not refunded to them. Securities Exchange Commission has made rules requiring Mutual Funds to refund the full amount of prepaid commission to investors if the investor cancels the plan within 45 days and 85% of the amount, if the investor cancels within 18 months of joining the saving plan. Those who cancel the commitment after 18 months get no refund.