Question: If mutual fund units are transferred, does the nomination continue?
Answer: No. SEBI states that nomination in respect of the units stands rescinded upon transfer of the units.

Supporting evidence:
title: sebi.gov.in/1768571780322.pdf
quote: Nomination in respect of the units stands rescinded upon the transfer of units
context: be nominated and in that event, the name and address of the guardian of the minor nominee shall be provided by the unitholder.
[Nomination can also be in favour of the Central Government, State Government, a local authority, any person designated by virtue of his office or a religious or charitable trust.]
3. The Nominee shall not be a trust, [ other than a religious or charitable trust , ] society, body corporate, partnership firm, karta of Hindu undivided family or a Power of Attorney holder. A non-resident Indian can be a Nominee subject to the exchange controls in force, from time to time.
4. Nomination in respect of the units stands rescinded upon the transfer of units.
5. Transfer of units in favour of a Nominee shall be valid discharge by the asset management company against the legal heir.
6. The cancellation of nomination can be made only by those individuals who hold units on their own behalf singly or jointly and who made the original nomination.
7. On cancellation of the nomination, the nomination shall stand rescinded and the asset management company shall not be under any obligation to transfer the units in favour of the Nominee.*]
Name : ................................……………………………
Address : .............................................…………….

Instructions

Date : ...................................................……………
- (2) Signature : ....................................................……………
Name : ................................................................……
Address : ................................................................…
Date : ................................................................……

5. Auditor's Report

- (i) All mutual funds shall be required to get their accounts audited in terms of a provision to that effect in their trust deeds. The Auditor's Report shall form a part of the Annual Report. It should accompany the Abridged Balance Sheet and Revenue Account. The auditor shall report to the 450 [trustee company] and not to the 451 [ unit holders].
- (ii) The auditor shall state whether:
- (1) he has obtained all information and explanations which, to the best of his knowledge and belief, were necessary for the purpose of his audit,
- (2) the Balance Sheet and the Revenue Account are in agreement with the books of account of the fund.
(iii) The auditor shall give his opinion as to whether:
1. the Balance Sheet gives a true and fair view of the schemewise state of affairs of the fund as at the balance sheet dat