The Statement of Account (SOA) method is a traditional way of holding mutual fund units, where the fund house (AMC) maintains a record of your investments and issues a statement as proof of your holdings. Unlike a Demat account, this method eliminates the need for dematerialisation, making it a direct and cost-effective way to hold mutual fund units.
Platforms like Kuvera leverage the SOA method to offer investors a zero-cost, commission-free investment experience in Direct Plans. By working with Registrar and Transfer Agents (RTAs) such as CAMS and KFintech, Kuvera ensures seamless tracking and redemption of investments, providing a hassle-free experience for investors.
As per the latest guidelines from the Association of Mutual Funds in India (AMFI), investors can now transfer mutual fund units held in the SOA mode without the need for dematerialization, subject to certain conditions. This update, combined with Kuvera’s approach, offers a comprehensive understanding of the benefits of the SOA method in India.
Key Features of the SOA Method
1. Direct Holding with AMC
Mutual fund units are maintained directly with the fund house (AMC) instead of being held in a Demat account with NSDL/CDSL.
The investor’s record is maintained by Registrars and Transfer Agents (RTAs) like CAMS and KFintech.
2. Issuance of Statement of Account (SOA)
Investors receive an SOA, which includes:
- Fund name and folio details
- Number of units held
- Net Asset Value (NAV)
- Transaction history (purchases, SIPs, redemptions, dividends)
The SOA serves as official proof of ownership and is updated every time a transaction is made.
3. No Need for a Demat Account
Unlike Demat-based platforms (e.g., Zerodha, ICICI Direct), SOA holdings do not require a Demat account or a Depository Participant (DP).
This means zero Demat maintenance fees and DP charges.
4. Redemption and Transactions
Investors can redeem or transfer units directly with the AMC or via RTAs (CAMS/KFintech).
The redemption amount is directly credited to the investor’s bank account.
Let us now see how the SOA Method works on Kuvera:
- The SOA method on Kuvera allows direct investments in mutual funds with AMCs, eliminating the need for a Demat account or Depository Participant (DP).
- When you invest, Kuvera sends the purchase order directly to the AMC, which then issues a Statement of Account (SOA) that includes details like the number of units purchased, transaction history, NAV, and dividends.
- Kuvera consolidates your investments across multiple AMCs into a unified dashboard, providing easy access to all your holdings.
- You can redeem units at any time, with the proceeds credited directly to your bank account.
- Kuvera offers commission-free investing in Direct Plans, ensuring lower expense ratios, and provides a Consolidated Account Statement (CAS) through CAMS/KFintech for multiple holdings.
New AMFI Guidelines: Transfer of Units Held in SOA Mode
Earlier, transferring SOA held units required converting them to Demat form. However, AMFI has introduced a standardised process that allows investors to transfer mutual fund units held in SOA mode without dematerialization, under the following conditions:
Conditions for Transfer of Units in SOA Mode
1. Applicability
The transfer facility is available for all mutual fund schemes except Exchange Traded Funds (ETFs).
2. Partial Transfers Allowed
Investors can transfer only a part of their units from a folio.
If the remaining units in the transferor’s folio fall below the minimum investment threshold, the remaining units will be automatically redeemed.
3. Record Date Transactions
If a transfer request is lodged on the record date, any dividends or corporate actions will be processed in favour of the transferor before completing the transfer.
4. Cooling Period for Redemptions
Transferred units cannot be redeemed immediately.
A 10-day cooling period applies from the date of transfer before redemption is permitted.
5. Eligible Unitholders
The transfer facility is available under the following scenarios:
- Surviving Joint Holders: Adding a new joint holder upon the death of an existing joint holder.
- Nominee to Legal Heirs: A nominee can transfer inherited units to the legal heirs.
- Minor to Major Transfers: When a minor unitholder attains majority, they can add a parent, guardian, sibling, or spouse as a joint holder.
Example
Consider an investor holding 5000 units of HDFC Flexi Cap Fund in SOA mode. Upon the investor’s demise, the nominee wishes to transfer the units to legal heirs.
- Under AMFI’s new rules, the nominee can now transfer these units without converting them into Demat form.
- After the 10-day cooling period, the new unitholders can redeem or hold the units as per their investment strategy.
How is the SOA Method Different from the Demat Method?
| Features | SOA Method (Kuvera) | Demat Method (Stock Brokers) |
|---|---|---|
| Where Units Are Held? | Directly with AMC | In Demat account with NSDL/CDSL |
| Demat Account Required? | ❌ No | ✅ Yes |
| Transaction Platform | Direct with AMC via Kuvera | Through brokers & stock exchanges |
| Redemption Processing | Direct with AMC | Through broker & DP |
| Charges | ₹0 (No AMC/DP charges) | DP & brokerage charges apply |
| Ease of Switching AMCs | ✅ Easy | ❌ Complex |
| Redemption Speed | ✅ Faster (direct credit to bank) | ❌ Slower (broker processing time) |
| Regulatory Body | SEBI (via AMCs & RTAs) | SEBI (via Depositories) |
Why does Kuvera Prefer the SOA Method?
- Zero Cost – No DP charges or brokerage fees.
- Direct Plan Advantage – Lower expense ratios compared to regular plans.
- Faster Transactions – Direct redemptions from AMCs ensure quick access to funds.
- Simplified Portfolio Tracking – Kuvera consolidates all mutual fund holdings in one place.
- Flexibility in Transfers – AMFI’s new rules enable seamless unit transfers in SOA mode.
When to Choose the Demat Method?
The Demat method can make more sense in case of the following:
- If you are actively dealing with stocks and ETFs and want all holdings in one place.
- If you prefer buying/selling mutual funds through the stock exchange (NSE/BSE).
- If you do not mind extra charges for convenience.
Contrarily, for investors seeking low-cost, hassle-free, and direct mutual fund investments, the SOA method on Kuvera is the ideal solution.
Wrapping Up
To wrap up, unlike Demat-based platforms that charge annual maintenance fees and transaction costs, Kuvera with the adoption of SOA methodology, ensures zero-cost, direct plan investing while complying with AMFI’s new SOA unit transfer framework.
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