Investors looking at investing in the stockmarkets have one more reason to cheer. SEBI has done away with account opening and custody charges for DEMAT accounts from February 1. The two depositories-NSDL and CSDL-do not charge any account opening fees. However, depository participants used to charge for opening a DEMAT account as well as levy an annual account maintenance fee. Regardless of how many shares an investor held, he had to pay for the period the security was in his account. Depository participants charged between 75 paise and Rs 1.50 a month for holding securities in a DEMAT account.

Who foots the bill now? The costs will be passed on to companies whose shares are in the depositories. Corporate entities benefitted by the introduction of the DEMAT system because they no longer had to maintain share transfer departments. SEBI feels this benefit should be passed on to retail investors. So companies will be asked to pay a part of the account maintainence charges. Investors will only need to pay the transaction charge everytime an instrument is credited or debited in their DEMAT account. Says SEBI Chairman G.N. Bajpai: "The cost of opening and operating a DEMAT account should be reasonable."

For many long-term investors, the custody charges levied by depository participants was a major disincentive. The longer they held the securities, the higher were the custody charges. SEBI has done away with that problem, making long-term investments more profitable. SEBI's move is also expected to encourage participation by retail investors who felt the various charges would eat into

MONEY TALKS

COMMODITY BROKING: Financial services provider IL&FS Investsmart is venturing into commodities trading. Its newly formed subsidiary, IL&FS Investsmart Commodity, will offer integrated services in all major commodities. It is a member of two major commodity exchanges-the National Commodity and Derivatives Exchange (NCDEX) and Multi Commodity Exchange of India (MCX).

RETIREMENT PLANS: Kotak Mahindra Old Mutual Life Insurance has launched the Kotak Retirement Income Plan (KRIP), a unique plan which not only offers the benefits of market-linked returns but also guarantees the sum assured. KRIP is a unit-linked plan where the investor's money is invested in funds of his choice.

FOCUSED DIVERSITY: The Principal PNB Asset Management Company has launched its Principal Focused Advantage Fund. The fund will invest in not more than six sectors at a time, with no sector getting more than 25 per cent of the portfolio. This will prevent overexposure to any one sector yet retain the focus.

I INVEST IN...

ISHAA KOPPIKAR, ACTOR
"My parents manage my finances. It's because of them that I have managed to buy a beautiful house, otherwise I would have spent all my money on watches and shoes. Investments are in debentures, Public Provident Fund and stocks ... these are just terms that I hear being used."

MUTUAL FUND TRACKER

Indexed Laggards Top three index plans, equity and debt funds   1 YEAR 6 MONTHS 1 MONTH Index-linked equity funds Nifty Junior BeES 16.54 37.58 -5.43 Tata Index Sensex A 12.17 29.03 -0.53 Franklin India Index Nifty 10.57 27.00 -3.09 Diversified equity funds Magnum Global 63.60 55.14 -2.05 Magnum Contra 61.92 49.13 -0.63 Alliance Buy India 53.97 48.93 -4.56 Debt funds (medium-term) Libra Bond 10.92 9.97 6.17 PruICICI Income 9.02 8.12 1.41 BoB Income 5.23 1.47 0.27 Figures are percentage returns as on January 28, 2005. Funds ranked on basis of one-year returns.                                                                             Source: ValueResearch Diversified equity funds outperformed index funds because of the big rise in mid-caps in the past one year. Uncertainty in interest rates made debt funds very volatile.

-By Malini Bhupta