Over Rs.1100 crore of investors’ money lies unclaimed with top 10 MFs

Over Rs.1100 crore of investors’ money lies unclaimed with the top 10 mutual funds. Data compiled from individual fund house websites show that the top 10 fund houses hold nearly Rs.860 crore of unclaimed dividend and Rs.243 crore unclaimed redemption money.

Unclaimed amounts of mutual funds are on account of non-encashment of dividends and maturity proceeds by investors.

Among the top 10 fund houses, UTI MF at Rs.544 crore has the highest unclaimed dividend and unclaimed redemption in their schemes. The fund house's unclaimed dividend stands at Rs.484 crore while unclaimed redemption stands at Rs.60 crore.

Next in the list is SBI MF. The largest fund house's schemes hold Rs.216 crore unclaimed dividend and Rs.42 crore unclaimed redemption. HDFC MF follows in the list with Rs.68 crore unclaimed dividend and Rs.21 crore unclaimed redemption in its schemes. Aditya Birla Sun Life Mutual Fund has the lowest unclaimed amount among top 10 fund houses at Rs. 2.50 crore.

The unclaimed amount has accumulated over the years as many investors have lost track of their investments and may not have informed their fund house about the change in address; this problem gets further compounded in the absence of email address. Suresh Sadagopan of Ladder7 Financial Advisories feels that at times, bank accounts get changed and do not get updated in the folios or there is a name mismatch due to which the redemption or dividend proceeds does not get directly credited. Incomplete KYC with missing PAN is another reason, he points out.

AMCs cannot take possession of the unclaimed corpus. Fund houses are supposed to deploy unclaimed proceeds in money market securities and bank deposits after three months. If an AMC receives claims from investors, the AMC redeems the proportionate amount of securities and pays it to investors.

What happens if an investor makes a claim? If the claim is made within three years, then payment is based on the prevailing NAV after adding the income earned on unclaimed money. Claims made after three years are given the NAV at the end of 3 years.

AMCs are allowed to charge a maximum 0.50% per annum as investment management and advisory fees though it is up to the AMC to decide if they wish to charge this fee. Some fund houses do not charge any fee for deploying these unclaimed proceeds.

If investors fail to claim their money even after seven years, then the accumulated fund gets transferred to Investors Education and Protection Fund (IEPF) which is utilized for spreading financial education. Once the amount gets transferred to IEPF it can’t be redeemed.