The Role and Function of Folio Numbers in Your Investments

A Folio is a unique identification number to be allocated exclusively to fund investors, compared to bank account numbers. The bank will assign a specific number to identify your account when opening an account. As a result, each mutual fund investor will be assigned the same Folio number by an asset management company. 

This article aims to explain the folio number meaning, its advantages and disadvantages.

Understanding Folio Number Meaning

The Folio number is a unique identification number assigned to each investor who has invested in funds. These numbers are a reference for identifying an investment account in the Mutual Fund. A Folio number will also be a monitoring mechanism that records the investor’s transactions, e.g., purchases, redemptions, dividends and other related activities.

The Folio Number is particularly important for investors and the Asset Management Company (AMC) because it enables seamless and effective investment management. Using Folio Number Status, investors monitor the performance of their investments and review their portfolios. In addition, the Folio number can be used by asset management companies for updating investor accounts and sending accurate statements and reports.

Record keeping is essential for mutual funds to ensure that all investors can receive their entitlements and establish the appropriate fee structure for each investor. While brokers generally make it easier for investors to keep records, they can be required by fund managers to supply Folio numbers in the interests of accuracy. The Folio number can be obtained through investment statements or stockbrokers. Making multiple purchases using a single Folio number is also possible, but only for the same mutual fund.

How is Folio Number Relevant To Investors?

You should know folio numbers and their importance to the funds you invest in as an investor. To summarise your investment history in a particular fund, mutual fund statements play an important role. Similarly, all transactions related to a specific bank account are recorded in a bank account statement.

This statement shall include a folio number since it is the unique identifier associated with your investment in one fund. Managing your investments with the Asset Management Company (AMC) can be simplified using the same folio number. This allows you to view all your investments with the AMC in one place.

However, when you invest, AMC is required to send you an electronic statement within 2–3 days and a hardcopy statement within 10–14 days. Your folio number, investment amount, allotted units, NAV, and other information about your investment are listed on this statement.

How to Find the Folio Number?

You can check your folio number in different ways. 

1. Consolidated Statement of Accounts

The Folio number, which summarises all your investments into a single place in various Mutual Funds, can be found on the Consolidated Statement of Accounts.

2. App or website of Asset Management Company, AMC

Another way to look for your Folio number is using the AMC app or website. Click on the Portfolio section to view your Folio number once you have logged into your account.

3. The Statements Of The Mutual Funds

When preparing a mutual fund statement, a document including all of the details of your investment, such as the Folio Number, must be considered. Your Folio Number can be found on the first page of the statement, along with other crucial details, including the investment amount, the units allotted, and the NAV.

Advantages of Folio Number

There are many benefits to having the Folio number in a mutual fund.

1.No duplication: 

There will be no duplication of investments if the same Folio number is maintained. This will help prevent any confusion or error in your portfolio management. 

2. Efficiency in reporting: 

The Folio number is an important element of the Mutual Fund statement. This provides timely and precise investment reports for you.

3. Consolidated view: 

You can view all your AMC investments in a single statement with a Folio Number. This will make it easy for you to manage your investments and check their performance. 

4. Simplifying portfolio management: 

Using a consistent Folio number for all your investments can make it more convenient to manage this portfolio. Without remembering the different numbers, you can make changes to your investments.

5. Simple redemption: 

You need to redeem your investments. A hassle-free redemption procedure is ensured by using a single folio number.

Disadvantages of Folio Number

Some of the disadvantages of Folio Number is as follows: 

1. No centralization

Folio numbers are assigned by individual depositories like NSDL and CDSL. There is no single centralised database for folio numbers. This can make tracking and consolidating investments across demat accounts complex.

2. Duplication

Same entity can have multiple folio numbers across demat accounts and mutual funds. This can result in duplication and difficulties in tracking overall investments.

3. No standard format
There is no standard format for folio numbers. Different depositories and fund houses follow different conventions making it difficult to parse and process folio numbers.

Not linked to PAN: Folio numbers are not linked

Conclusion

It’s very useful to keep your Folio number handy because it enables you to follow the progress of investments in mutual funds and make good choices based on that information. It is a good time to explore mutual funds as an attractive investment option if you have not already done so. Invest with the Share India trading app, as it is easy because they carefully selected the most successful funds offered by India’s leading asset management companies. 

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