Sunday, August 28, 2016

Can Partnership Firms Invest in Mutual Funds?

Can Partnership Firms Invest in Mutual Funds? Yes it can.

Dear Friend!
A very valuable question.
The answer to the question, "Can Partnership Firms Invest in Mutual Funds?" is an emphatic Yes. A partnership firm can invest in mutual funds, by opening a mutual fund account, as it opens and operates a bank account. 

The partnership deed, the contractual instrument that brings the firm into existence, shall expressly permit such investment. The mutual fund(s) will usually demand a certified copy of the partnership deed to ensure that such investments are permitted. The deed should also mention which partner(s) are authorised to apply for make investments in mutual funds.

With respect to questions like how to invest in mutual fund, what type of mutual fund to choose, whether it is a single lump-sum or sip investment, for how long to make and keep the investment intact, fund management costs, etcetera, the firm may seek financial advice from an honest and competent person. The firm better beware that advisors are known to be good at earning fat fees for themselves rather than earn a return for the investor.

Can Partnership Firms Invest in Mutual Funds?

Even though a partnership firm can make investments, one should understand that a partnership firm is not a separate legal entity like a company incorporated under the company law. Therefore, the partners are technically joint owners. As long as the firm continues to exist it will hold all assets and liabilities. In the event of dissolution of the partnership firm, the assets and liabilities are either liquidated or distributed among partners, in which case the mutual fund investments may get transferred to one or more partners or sold off.

Suggested Further Reading:


In conclusion, the answer to the question, "Can Partnership Firms Invest in Mutual Funds?" is a definite yes. Partnership firms can make and hold mutual fund as well as all other types of assets as well as investments.

Thank you,

With Best Regards,

Anand



2 comments:

  1. superb... Even now many people don't know about the mutual fund. A mutual fund is the best choice for small investors and makes more money return. there is no any restriction in mutual funds to invest money.
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