Importance of Folio Number in Mutual Fund Investments
If one has ever invested in mutual funds, the folio number is the address where the mutual fund units are housed. A folio number is to mutual funds, what bank account number is to bank. Like one may have multiple bank accounts with different banks and even multiple savings/ deposit accounts with the same bank, one may also have numerous folios with a single mutual fund house and across various mutual funds.
The folio number is auto generated by the mutual fund house when a new investor makes a transaction. If an existing investor is making a new purchase with the mutual funds over their website, the portal will generally check with the investor whether they want the investment to be made in the existing folio or a new folio. A few investors prefer to have new folios for each of the transactions, to keep separate records for each transaction. However, the investors must note that mutual funds offer convenient steps to generate a statement of transactions for any earlier periods, thereby making it easier for the investors to keep a record of various purchase transactions even within the same folio.
Here is how folio number assumes importance for the investors:
Locating the Mutual fund Investments
Folio number allows the fund houses to find the investments in the name of the investor, as fund houses link the mutual fund units to specific folios. All the investor needs to share with the fund house is the folio number and the details of transactions as well as execution of further transactions including redemption, switch out, etc. may be undertaken after sharing the folio number with the fund house.
A storehouse of all mutual fund transactions
A folio number may help the investors review their previous transactions within that folio. With various mutual fund investments in a single investor folio, it becomes easy for the investors to review the investments and manage the information required to make necessary tax compliances.
Convenience to Change the details across multiple investments
As numerous investments across a single fund may be linked within a single folio, it becomes easier for the investors to manage their investments easily. A single change effected over the investor folio may change the details to all the holdings within that folio.
How to Find your Folio Number
There are two prominent ways by which the investor may find their folio numbers:
Consolidated Account Statement (CAS)
This is one of the investor-friendly service, wherein the investors receive a consolidated statement for all the equity and mutual fund investments across different folios and fund houses. In the summary of mutual fund investments shared within the CAS, the first column in the table is that of the folio number.
CAS also provides meaningful information in respect of the actual amount invested and the present value of such investments, thereby providing a piece of immediate information about the gain/ loss on such investments. As such, the investors may have a glance on the outperforming funds as well as the underperforming funds.
Statement of Account
As and when an investor makes a mutual fund transaction, the fund houses generally send a confirmation e-mail, which may also contain the account statement. It provides the general details, including the fio number, address etc. Further, it also provides the details of the transaction, including the amount invested, the number of units allotted, and the NAV at which such units have been allotted and further provides a summary of mutual fund unit holdings within that folio.
Consolidation of Folios
If an investor has created multiple folios with the mutual fund, he/ she may consolidate the folios into a single folio, provided that the mode of holding, order of holding, name of holders, in all such folios is exactly same. For example, consolidation cannot be done if the mode of holding in one folio is single, while the mode of operation in another folio is joint. The investors must strive to keep the mutual fund records as lean as possible, and consolidation of folios is indeed one of those steps.