New Delhi, March 10 -- Investors in India can hold mutual fund units in two formats: a statement of account (SOA) with the asset management company (AMC) or a demat account with a depository participant (DP) such as Central Depository Services Ltd or National Securities Depository Ltd.

The choice influences how easily you can transact, the features available and the overall cost of holding investments.

When you invest in a mutual fund, the money goes to the AMC. At the same time, the transaction details are sent to a registrar and transfer agent (RTA).

RTAs verify investor details, allocate units and store the records in their system. This is the SOA format, where your holdings are maintained directly with the mutual fund.

If units ar...