Dematerialization (DEMAT) accounts are not required for investors to buy or sell mutual fund shares, but there are many benefits. Demat accounts allow investors to purchase mutual fund shares without the assistance of a broker by transferring funds electronically

With a Demat account, investors do not need to keep physical fund certificates to redeem shares.

Direct purchase of mutual funds from the company

Generally, mutual fund stock purchases can be made quickly and easily through Demat accounts. However, UCI units can be purchased by investors directly from the UCI company. By bypassing a Demat account or broker, investors can trade now.

Investors can gain more control, accountability, and responsibility over their mutual fund trading by contacting the fund company directly.

Share purchase request forms are made available by mutual funds, and investors can fill them out and send them to the company. When you sell your shares, you can have the money deposited directly into your bank account after the transaction. For those who prefer, you can also have a check sent to a specific address.

Via Demat Account Buy Mutual Funds

Before the Internet and the widespread use of personal computers, investors received physical certificates for the stocks and other investments they purchased. On the other hand, investors can now use a Demat account remove the need for physical certificates. Electronic accounting allows investors to buy, hold and sell mutual funds online.

A broker can approach investors to manage their mutual fund account, but a Demat account offers them an alternative. An online gateway is used to make fund selection, comparison and review more accessible to investors who prefer to manage their accounts.

Advantages of the DEMAT account

Demat accounts offer many advantages to investors when buying mutual funds. Compared to the previous method, which relied on physical certificates, one of the main advantages is that it is an easier and more secure way to hold securities. Paper certificates can be lost, stolen, or damaged, making them less secure than digital certificates. Investors can be duped by criminals using fictitious certificates.

Thanks to electronic accounting, investors can have their accounts updated automatically and quickly. Transactions can be completed faster and error-free if mutual funds use technology to reduce paperwork and human error.

Does a Demat account need to be created to invest in mutual funds

Although there are some shortcomings from a financial planning perspective,

Many people do not understand why they have to open a Demat account invest in mutual funds. Mutual fund investments do not require a Demat account, which has many advantages.

There are no physical certificates

Investing in stock securities is more accessible with a Demat account as physical certificates are no longer required to be on hand. There is no need for a Demat account in the case of mutual funds as there are no physical certificates and all records are electronically controlled. The mutual fund agency assigns each investor a folio number, which works like a Demat account to transfer all fund information to that investor. Demat account is useless when investing in mutual funds as there are no physical certificates to keep safe.

Trading accounts are not required

Investors who want to invest in a mutual fund must open a trading account with a brokerage firm, which is unnecessary work. In reality, it imposes several restrictions and increases the cost of capital. To invest or withdraw money, you must complete a paper form on the SICAV’s website or on one of the many third-party sites offering this service.

Investing with a bigger perspective

Having a single screen to see all of your investments is a big selling point for a Demat account. As the NSDL now offers investors a global view of their investments, including UCITS, this justification is no longer relevant. Conversely, demographic accounts limit your options and increase the cost of investing in mutual funds. You can invest in mutual funds by mutual fund apps easily.


Until recently, you needed a Demat account to buy mutual funds through an exchange. On the other hand, mutual fund investors no longer need a Demat account. Online banking is a convenient way to make mutual fund purchases. It is the most popular method of buying mutual funds among investors.

Details of an investor’s holdings, such as purchase price, number of units purchased, and current value, are included in mutual fund accounts. It is more convenient for investors to buy and sell mutual funds without opening a Demat account.

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