Portfolio managers manage a basket of equities and bonds within diversified investment vehicles known as mutual funds.
If you are investing in mutual funds, you must’ve come across the term folio or folio number.
While it might’ve seemed confusing at first, let us tell you, it isn’t as complicated to understand as it seems.
Investors use a folio number in mutual funds to consolidate the fee structure and track the returns they receive in one place.
That is the gist of the usage of folio in mutual funds. Now, let’s proceed further in the blog to learn more about what is folio in mutual funds and various aspects of it.
What is a Folio Number in Mutual Funds?
A folio number in mutual funds is a unique identification number assigned to an investor’s account. It helps mutual fund companies and managers track and manage investor accounts easily and precisely.
While investing in mutual funds, the individual’s folio number account automatically records the received returns along with the fee structure.
This unique folio number is assigned by an asset management company (AMC) to identify your account.
The folio number remains the same throughout your investment tenure with that particular mutual fund.
Investors may request a folio number history from the managers to analyse their recorded investments.
Furthermore, an investor can also request multiple folio numbers that directly link to a single mutual fund. One can also combine all their folio codes into one if they wish.
How is a Folio Number Relevant to Investors?
As we discussed above, a folio number records all your investments in various mutual funds in a single place.
That factor automatically makes the folio number very crucial and relevant for the investors.
Since all your investment history in a particular fund will be summarised in one place, folio numbers in mutual funds make it easy for you to navigate through your investments.
Moreover, the folio number also simplifies the management of your investments with the Asset Management Company (AMC). It allows you to view all your investments with the AMC in one place.
How to Find the Folio Number?
There are multiple ways you can use to find the folio number.
One of the ways to find the folio number is to check the consolidated statement of accounts presented by your bank.
Similarly, you can also check the statement released by the mutual funds in which you’re investing. It is mentioned along with other crucial details, including the investment amount, the units allotted, and the NAV.
If you’ve somehow missed the above two options to know about your folio number, you can simply visit the website of AMC (Asset Management Company). Log into your account and go through the portfolio section to know the folio number.
Understanding Folio Number via Example
For instance, If you invest in a mutual fund from SBI, you will be assigned a unique number like 123456789. In this case, your folio number will be “SBI1234567”.
Now, even if you invest in different schemes under the same AMC, the activities will be registered under the same folio number. This helps in keeping records of all your investments within the same AMC.
What are the Advantages of Folio Number?
There are multiple benefits of the folio number in mutual funds. Such as:
- No duplication: Folio number leaves no chance for duplication of investments preventing any confusion or error in portfolio management
- Investment Precision: Folio number provides timely and precise investment reports. It also helps in managing investments and checking performance
- Easy redemption: Folio number provides a way to enable easy redemption procedures for your investments. Having a folio number simplifies the process of additional investment or retrieval of all your transactions linked to a single identifier
- Convenience: Folio number allows easy retrieval of transaction history and investor’s contact information. With it, you can easily access your details online or through the mutual fund company’s customer service
- Identification: Folio number serves as a unique identifier for your mutual fund investments, therefore, it helps AMC in verifying the authenticity of the unit holder
- Consolidation: A folio number allows grouping together of multiple mutual fund investments with the same fund house. This makes it easy for the managers and yourself to manage and inspect your portfolio
- Security: Using a folio number also ensures security for your investments. It makes sure that all your transactions are linked to the specific account which in turn reduces the risk of errors or unauthorised transactions
Therefore, these are some of the palpable benefits of having a folio number in mutual funds.
The Bottom Line
Going through the blog, we hope you understand what is folio in mutual funds along with its multiple aspects. If you are to understand with a simple example, you can compare it with general bank statements.
Just like a bank statement gives a record of your transactions in one place, a folio number keeps track of your investments in mutual funds.
Keeping the record in one place through a folio number in mutual funds makes it easier for you to navigate through the transactions and inspect the losses and profits.
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