What is a Folio Number? Definition and Uses?

In mutual fund investing, the Folio number refers to the unique identification code granted by the AMC (asset management company) to the investor. In terms of accounting, folios are references to chronological, or sequence-wise bookkeeping entries. In mutual fund schemes, maintaining a record of the investor’s account is a crucial aspect of investment. Codes are the simplest and most convenient way to assign a unique value to the digital form of assets and properties.

What is a Folio number? : Definition

Folio numbers are unique numeric or alphanumeric identification numbers assigned to individual investor accounts in mutual funds. The AMC (asset management company) grants it to the investor. Asset management companies are organizations and firms that manage mutual funds’ assets.

The Folio number is used as a reference to identify an investor’s account in mutual funds. An identification number marks your portfolio! It helps in keeping a record and monitoring the performance of the investors, as well as managing transactions in mutual funds.

If you are new to the world of investment, then it is necessary to learn about folio numbers and their uses.

What are the uses of Folio numbers?

Banking and investment

With folio numbers, investors can easily manage multiple transactions. It is essential for managing transactions and keeping track of investments. If the investors are engaged in multiple transactions, folio numbers assign a distinct identity to segregate them, hence people can differentiate between their holdings in one place.

In banking, folio numbers are useful for clients as organizations can use them to reduce errors and confusion. Banking customers can easily refer to their accounts whenever they need to avail themselves of certain services. 

Record keeping and ledger entries

As mentioned above, folio numbers help in keeping records of every entry. Every entry must be recorded and reviewed properly. With folio numbers, transactions are easy to reference and locate details about a specific mutual fund transaction. Plus, Folios are good for both distributors and investors to track the status of investor accounts. Folios are good for tracking duplicate ledgers to look out for accuracy in financial statements. 

Minimizing frauds

Folio numbers are useful for bank creditors, regulators etc. as their benefits are more than aligned with mutual funds. Folio numbers can help in identifying frauds and mistakes that can happen in investments. Investors can trace the flow of funds in and out of their accounts using an audit trail to identify any suspected fraud. An audit trail is a record that accounts for all details regarding trade and tracks financial data from its actual source destination. Folios are confidential and are not authorized to be assessed by unknown third parties.

Demat and folio numbers

India has witnessed significant growth in the global stock market and mutual fund industry. Especially after the pandemic, these numbers have only increased through the years with multiple platforms and startups in the mutual funds. Investment in the stock market and Demat account has grown since then, so awareness has also grown in young minds. A Demat account allows you to store your physical assets such as mutual funds, bonds, shares etc. digitally in an electronic form.

Saves time and effort

As an Investor you  can make a transaction without undergoing the KYC registration if it comes under the same fund house.

Customer service

The concept of folios in mutual funds is important as a method to track the status of mutual fund investments. You can track your mutual funds through online portals with the help of folios. A lot of AMC provides 24/7 customer service to check the performance of your investments. They provide quick resolution of all customer queries.

Managing portfolio

In balancing your portfolio, portfolio numbers can be of great help! The cleaner segregation of your funds under each folio number helps in labeling your assets. People can have multiple folio numbers depending on how many investments they are going to make. Folios can help you decide and agree to specific goals and risk assessments in investment.

Real estate

In the real estate industry, professionals use folio numbers to keep track of specific properties. Folio numbers are used to assess the old sales record of the property, and predict, and analyze current and future trends in the market. Folios are used in identifying a listing to avoid confusion between different properties. Mortgage companies use folios to ensure they are lending towards their authentic asset. Folios are used to identify risks associated with property ownership. It protects both agents and buyers by providing the legal status of a particular property and ensuring the agent is confident enough to secure a legitimate deal.

How do I get a folio number?

There are following ways you can get your Folio number:

Mutual fund statement

The AMC sends you a fund statement every month or on a periodic basis in certain cases. You can get your folio through this fund statement. In the case of SIP’s (System Investment Plan), the fund statement is sent on a monthly basis; with lump-sum investment, the statements are sent on a periodic basis.

Consolidated Account Statement

Through the Consolidated Account Statement (CAS), you can get your folios. Consolidated Account Statements are fund statements that summarize your overall investment plans under different fund numbers provided by different AMCs. Consolidated Account Statement sends fund statements periodically.

Contacting Registrar and Transfer Agents

You can physically reach the registrar and obtain your folio number once you are verified as a bona fide user. There is also an option to call the Registrar and access your folio details anywhere from India.

Final takeaway!

Folio numbers come in handy as they allow you to keep track of your mutual fund investment and make the right decision based on the performance. Getting aware of Folio numbers is a good choice if you are considering investing in mutual funds.

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Also, check out our recent post on: “All you need to know about Shariah investing !“.

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Disclaimer – This article is for educational purposes only and by no means intends to substitute expert guidance. Mutual fund investments are subject to market risks. Please read the scheme-related document carefully before investing.