Statutory, Brokerage,
Risk & Other Disclosures

All mutual fund distributors have to pass an examination conducted by the National Institute of Securities Markets (NISM).

Thereafter, they have to register with the Association of Mutual Funds in India (AMFI) and obtain an AMFI Registration Number (ARN).

We fulfill both these requirements. The AMFI distributor code of this company is ARN-.

When investing in mutual funds, you have two options. You can invest directly with the mutual fund or proceed through a distributor.

Investing directly with mutual funds is less expensive. However, you will receive neither advice nor services from us if you choose the direct option.

We are bound by a code of conduct prescribed by AMFI, which is displayed on the notice board of our office and on our website.

You are entitled to demand photocopies of this code of conduct or ask for the code of conduct to be emailed to you absolutely free of charge.

This code of conduct can also be accessed on the AMFI website (www.amfiindia.com) and the websites of individual mutual funds.

You are strongly urged to familiarise yourself with the said code of conduct and form an opinion about whether we are adhering to the same.

If you have the slightest reason to believe that we are deviating from the said code, we would be grateful if you bring this to our notice immediately.

If in your opinion remedial action is not taken by us within a reasonable time, or you are not satisfied with such remedial action, you must change distributors or go direct immediately.

This is in your own interest.

Comprehensive documentation about specific mutual fund investment plans is freely available at our office as well as on the websites of all mutual funds.

The most comprehensive document is the Scheme Information Document (SID).

Next is the Statement of Additional Information (SAI).

The SID mainly contains information about mutual fund schemes. The SAI primarily contains information about the mutual fund, its asset management company, its trustees, sponsors, etc. The SID should be read together with the SAI and not in isolation, because the SAI is part of the SID.

The Key Information Memorandum (KIM) is essentially a summary of the SID and SAI.

As per SEBI regulations, every application form is to be accompanied by the KIM.

We reiterate that the SID, SAI and KIM of all mutual fund investment plans that we distribute are available at our office and on the websites of mutual funds free of cost.

Furthermore, these are amended from time to time and addendums thereto are also available on the websites of the mutual funds and through our office.

We strongly recommend that all mutual fund investors make the effort to go through these important documents and other useful publications such as reports and ‘fact sheets’ published by all mutual funds regularly.

For up to date information about mutual fund investment plans, monthly fact sheets are very useful and can be accessed at

https://www.amfiindia.com/investor-corner/online-center/monthlyfactsheets

Comprehensive and useful information for mutual fund investors is available in the “Investor Corner” section of the website www.amfiindia.com.

This is the website of the Association of Mutual Funds in India.

All investments, including mutual fund investments, are fraught with risk.

This is the first and most important point that you as a mutual fund investor must understand and accept.

We specifically bring to your attention that in the Scheme Information Documents, Statements of Additional Information and Key Information Memorandum, known commonly by their acronyms SID, SAI and KIM, disclosures are made relating to general risks of investing through mutual fund schemes as well as scheme specific risks such as:

• (i) Returns being subject to market risk including loss of capital on account of market volatility, force majeure events, changes in political and economic environment, default by issuers of securities to mutual funds, bankruptcy or insolvency of issuers and potential segregation of portfolio by AMC in such circumstances;
• (ii) Suspension of redemption facility in case the scheme faces liquidity crisis;
• (iii) Risks associated with subscription to new fund offering of the scheme such as price volatility risk, liquidity risk and delisting risk;
• (iv) Winding up of schemes on account of illiquid instruments, higher volume of redemption requests from the investors or on account of unforeseen market events.

In equity investments, it would be instructive to note that stock markets can go down significantly, even in well-diversified equity investments such as index funds.

It would be useful to remember that stock markets fell by about 54% between April 1992 and April 1993, following the Harshad Mehta scam.

From February 2000 to September 2001, they fell by about 56%, following the Ketan Parekh scam, the bursting of the tech bubble and the 9/11 terrorist attacks in New York.

And the Global Financial Crisis of 2007 succeeded in driving down stock prices by 60%, peak to bottom, between January 2008 and March 2009.

Systematic investment can mitigate risk, but certainly not eliminate it.

It would be useful to know what kind of risks an investor can face in systematic investments.

Those risk can be as high as thirty percent, twenty percent and ten percent in the first, second and third years of equity investing.

As an example, take an SIP of Rs 1,000/- per month in an NSE-100 index fund.

In one year you would have invested Rs 12,000/-. If you started at the market peak, you can see your investment fall by thirty percent of Rs 12,000/-, that is, Rs 3,600/-.

Let’s round it off to Rs 4,000/-. So your Rs 12,000/- systematic investment can have a value of Rs 8,000/- after a year of uninterrupted systematic investment in a serious stock market crash.

Similarly, your Rs 24,000/- systematic investment can have a value of Rs 19,000/- after two years of sustained systematic investment.

Your Rs 36,000/- systematic investment can have a value of Rs 32,000/- after three years of continuous systematic investment.

But this need not be bad news.

In fact, seasoned investors pray for negative returns during their first few years of systematic investment.

Only then can they be confident that they are buying securities cheap and will get above-average returns when the stock markets rebound.

Four hundred and twenty years of stock market history teaches us that no boom lasts for ever and no recession too lasts for ever.

Second, risk is of two types – risk that cannot be managed (for example, betting, gambling, speculation in financial, currency, cryptocurrency and commodity markets and games of pure chance) and risk that can be managed.

The risk in equity and mutual fund investments can very definitely be managed.

This is achieved by employing time-tested risk management tools which can control and significantly reduce risk.

Some of these risk management tools are diversification, asset allocation, the setting of investment time horizons, systematic investment and regular reviews.

Third, past performance of any mutual fund investment plans is neither a predictor nor a guarantee of future returns.

No one can predict future returns. By investing wisely however, you can increase the probability that you will obtain optimum returns and manage risk.

Investment author Frank L Netti points out that, “Poor investors seek the highest possible returns, while great investors seek the highest probability of good returns”.

Fourth, educating yourself about investment is important. You can read our basic papers on personal finance and investment.

Our papers give you:

• A brief overview of personal investment (separate document sent)
• A simple guide to personal financial planning (separate document sent)
• Sound general investment strategies for mutual fund investments (separate document sent)
• Insights into real estate investment (separate document sent)
• Insights into equity (stock market) investment (separate document sent)
• An explanation of objective-oriented investing (separate document sent)
• A few useful notes on personal finance and investment

Finally, we also urge you to take steps to increase your own knowledge of personal investment and personal finance.

For this, we have a list of recommended reading, which contains the world’s best books and literature on investment.

We do not charge advisory fees or transaction fees to any of our investors for mutual fund investments.

We do receive commissions from mutual funds on investments routed through us.

Comprehensive details about such commissions are contained in “brokerage structure” documents supplied to us at regular intervals by mutual funds with whom we are associated.

Printouts of these brokerage structures are displayed prominently on the main notice board of our office and also on our website www.simpluswealth.com

We do not do business with all mutual funds in India. We only deal with about ten leading funds.

All brokerage reports of mutual funds with which we are empanelled are displayed at our office, and on our website.

You can thus be aware of remuneration in the form of trail and other commissions received by us for the different schemes of various mutual funds from which schemes recommended to you are chosen.

You are also entitled to obtain printouts/photocopies of the said brokerage reports or have them emailed to you free of charge.

Finally, commissions paid to us appear in the consolidated account statements (CAS) that are emailed to all mutual fund investors at stipulated intervals.

We make it very clear that under no circumstances will we rebate or pass back commissions to investors.

We deliberately choose simple, low-cost investment plans of mutual funds because these turn out to be best for normal investors.

The actual brokerages we receive on these funds are as follows:

• On overnight, liquid, ultra-short term, money market and low duration funds: Between 0.04% and 0.65%
• On equity savings funds: Between 0.4% and 1.10%
• On equity index funds: Between 0.15% and 0.3% on NSE-50 funds, between 0.3% and 0.45% on Nifty Next 50 funds and 0.42% and 0.65% on Nifty Midcap 150 and Nifty Total Market index funds.

If you have any grievances against our company, please address the same to us either in person or by telephone or in writing, including by email.

Our address and contact details appear at the head of this disclosure document.

We inform you that while you can contact any of our staff for formalities, documentation, procedures and routine work, investor grievances must be brought straightaway to the personal attention of the top management.

You may therefore direct your complaints about mutual fund investments to any one of the following:

We try our best to redress grievances within a week.

Do not hesitate to revert to us if any grievance is not redressed within a week.

Apart from grievances, your suggestions and feedback are also always welcome.

The principal activity of this company is to provide personal investment services to individual investors.

The main area of the company’s operations is mutual fund distribution.

The firm makes investments of its own, almost entirely in mutual funds.

The investment strategies employed and investments chosen by the firm are exactly the same as the ones recommended to its clients.

Thus, we believe in eating our own cooking. Incorrect advice by us will affect our investments as much as yours.

Thereby, we attempt to establish a commonality of interest, while eliminating conflicts of interest in this area.

The company’s investment programme comprises of long-term, passive, buy-and-hold strategies, with no element of speculation, churning or short-termism whatsoever.

The company’s investments are on auto-pilot, via long-term SIPs and STPs.

Our own investing programme ensures that the incidental advice given to clients is based on, not just our extensive reading, but also practical experience, and therefore carries credibility.

We do not accept gifts from mutual funds or other financial institutions, beyond tokens such as a box of sweets for Deepavali.

In the past, leading mutual funds have offered us foreign junkets because we reached certain levels of business.

We have refused each and every one of these offers and will continue to do so.

We also do not participate in business augmentation contests which such organisations come out with from time to time.

If we recommend an investment plan or mutual fund, it is solely because we believe it suitably addresses a financial need of the investor to whom it is recommended.

Our company or its workforce is never under any pressure to meet sales or business targets.

None of our staff receive sales or volume based incentives. They are paid only salaries.

And our only expectation from them is a high level of client service.

Basic and broad general advice to investors is given in our literature on personal investment and finance referred to above.

Care is taken to ensure that the mutual fund investments suggested are suitable to clients.

But we do not do detailed financial planning or offer detailed and comprehensive investment advice to individual clients.

Only advice incidental to our primary activities is given. So, continue with us only if you think that the level of advice you get from our firm is sufficient for your needs.