The mutual fund industry in India has witnessed extraordinary growth. According to AMFI data, assets under management (AUM) jumped from ₹27.05 lakh crore in November 2019 to ₹68.08 lakh crore in November 2024. This two-and-a-half times growth shows the rising trust in mutual funds as a preferred way to invest.

As more people join this journey, one important question arises: How should you hold your mutual fund units? Investors have two main choices — a demat account or a statement of account (SoA) issued by the fund house. Both are secure and valid. Yet, they work differently and suit different needs.

What is a Statement of Account (SoA)?

A statement of account is the traditional way to record mutual fund investments. It is issued by the asset management company (AMC) or its registrar, usually CAMS or KFintech. You receive it in electronic or paper form.

The SoA contains all important details — your name, folio number, transaction history, NAV of the scheme, and the value of your units. Managing investments with SoA feels similar to operating a bank account. If you want to withdraw money, you can redeem units by specifying a rupee amount. For example, if you want to withdraw ₹10,000 and each unit is worth ₹100, the AMC redeems 100 units.

SoA is simple, clear, and free of extra charges. It works well for investors who focus mainly on mutual funds and prefer dealing directly with fund houses.

What is a Demat Account?

A demat account — short for dematerialised account — stores securities in digital form. Managed by depositories like CDSL and NSDL, it holds shares, bonds, ETFs, and mutual funds in one place. It removes the need for physical certificates and makes buying and selling seamless.

When you invest through a demat account, your mutual fund units appear just like shares. The key difference is how transactions work. In demat, you buy or sell units in terms of quantity, not rupee amounts. For instance, you may purchase 10 units of a fund instead of investing ₹5,000.

Demat accounts also give you a single login for all investments. Brokers often provide tools to analyse portfolios, track performance, and even pledge holdings for loans.

Demat vs. SoA: Side-by-Side Comparison

Demat Account Pros

• All securities in one account
• Quick redemptions and transactions
• Easy portfolio management and analytics
• Single nomination covers all holdings

Demat Account Cons

• Extra costs (maintenance, transaction fees)
• Reliance on brokers and platforms
• Redemption works in units, not fixed amounts

SoA Pros

• No account or maintenance charges
• Direct relationship with fund houses
• Easy rupee-based redemption
• Simple for long-term investors

SoA Cons

• Multiple statements across AMCs
• Nominations must be done separately
• Fewer advanced tracking tools

Which One Should You Choose?

There is no universal answer. A demat account suits investors who want speed, centralisation, and a single window for all assets. It’s useful if you already trade shares or ETFs.

If you focus mainly on mutual funds and don’t want to pay extra charges, an SoA is the better choice. It keeps things simple and cost-efficient. Some investors even mix both: holding shares and ETFs in demat while keeping mutual funds in SoA.

Conclusion

India’s booming mutual fund industry gives investors multiple ways to store and manage their holdings. Both demat accounts and SoAs are safe and regulated. Demat offers convenience, consolidated access, and faster transactions, while SoA provides simplicity, no-cost record keeping, and rupee-based redemption.

Your choice depends on what you value more — centralised control or low-cost simplicity. Either way, staying disciplined with your investments matters far more than the storage option you choose.