(Last Updated: April 9, 2019)
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How to Invest in Direct Mutual Funds?

  • You are thinking of investing in direct mutual funds. Here is the process and different ways to invest in Direct mutual funds. You can invest in direct mutual funds online and also offline. Keep reading to know how.

    Investments into mutual funds are gaining traction among people. And, since the introduction of mutual fund in India in 1963, the industry has covered many miles and now it is the most structured and well-diversified investment destination in India. The Indian Mutual Fund industry (MFI) comprising 42 mutual fund companies manages a total asset of Rs 20 lakh crore. The MFIs asset under management has grown five times since 31st March 2012.

    Such huge rise in the AUM has been due to the reforms that were undertaken in the sector by the market regulator SEBI. And, one of the most important reform is the introduction of Direct Plans in 2013. It helped the investors to invest directly into the funds without any help of distributors or financial advisors. This resulted in the lower expense ratio and higher return because the commissions paid to distributors were eliminated and the benefits are passed to the investors. Let's discuss the various options available to invest in direct plans of a mutual fund:

    Investing directly through AMC:
    Investors can invest in direct plans directly through the asset management companies. Investors have the options of both online and offline mode. In offline mode, the investor needs to visit the office of asset management company and submit the investment form, documents required, cheque with the investment amount and KYC document( if not done) with officials. In the investment form, direct plan of the fund should be mentioned.

    In the online mode, the investor needs to visit the official website of the AMC (Example: sbimf.com or hdfcfund.com) and create an account with them. The investor needs to fill up the online form with the details of the fund and complete the transaction by paying online. In the case of SIP, one need to tick the option and fill the duration of the SIP. After completion, Folio no. of the investment will be generated for future reference. Investing through online mode, one needs to remember the login password for smooth transactions in future.

    Investing through RTA portal (CAMS & KARVY):
    The mutual fund Registrar and Transfer Agents such as CAMS and KARVY allow the investor to directly invest in mutual fund through their website. The services offered are free and also help to get the e-KYC done through their website.

    Investors can register and purchase mutual fund through CAMS online platform. With single login-id users can invest in multiple mutual funds. There is one limitation to the system on SIP. The investors cannot directly start SIP through the system. At first, the user needs to create a folio no. by investing lump-sum in the fund and then had to create a "Common One Time Mandate" by registering their bank details for the auto debit feature in SIP.

    Karvy MFS, only existing investors with any mutual fund companies serviced by Karvy as a registrar can transact through the portal by registering their details of the previous investment.

    The biggest limitation of both systems is, it does not provide services of all mutual fund currently operating in India.

    Investing Through MF Utility:
    MF Utility is a single point interface system to invest in multiple mutual fund schemes. The system is owned and managed by 25 participating AMC. The services offered on the platform are free of cost and investor can opt for any regular and direct plans.

    To begin with, an investor first needs to get registered to have a CAN (Common Account Number). An investor has to be KYC compliant to get their CAN. Once CAN is created, all the existing folio under the PAN will be displayed where you can manage all your investment.

    Registration can be done through both online ( e-can) and offline mode.

    In registering through offline mode, an investor needs to send the following document to MFU office in Thane or MFU POS.

    • CAN Registration form
    • PayEezz Registration form
    • Self Attested Copy of PAN Card
    • Self Attested Copy of KYC document
    • Cancelled Cheque

    Investors opting for SIP in mutual fund need to register with the PayEezz. It facilitates the auto debit transaction from your account. It is similar to the ECS/NACH mandate for debiting bank accounts. Investor opting for lump sum does not need to register for PayEezz, they can opt Net Banking of NEFT options but it is recommended to have it.

    Once, the registration process is complete, an investor can access all its existing investment and can create new investment without the hassle of filling the forms each time.

    These are the various options to invest in direct plans, in each option, there are some pros and cons. It will take some time to develop the system around as all the system are new. But, the MF Utility and Directly from AMC options look better from a view of an investor. The RTA system (CAMS and KARVY) has few serious limitation regarding no. of funds available and SIP related issues, and at some point of time, the investor will look for other options. MFU in the first-hand looks bit tricky but once all the process is completed it is the most simple way to get hold of all your investment needs.

  • You can also invest money in mutual funds online.
    I just started using kuvera based on unbiased opinion of Gagan(kuddos). I got invited by their COO through email,will try unovest as well.
    If anyone is using clearfunds please share feedback.

  • I was seeking information on how to invest into mutual funds and found this article to be highly useful. It shows the means to invest directly into mutual funds which can be done through MF utility, RTA portal and even through AMC. Through any of the direct investment means, you can go to the company and pay money to make investment or do it online.

  • There are many tech platforms that have been built for investing in direct mutual funds. MFUtility has built the foundation for those platforms.

  • @brown2018addy I had one query about Kuvera. They invest in direct mutual funds and dont charge subscription as well to people. How does their business model work ? I mean i dont want to putting money with some company which has no business model as switching portfolio to another company is quite some pain.

  • @jigneshshah well MFUtility is quite some pain. Their platform just sucks. Its better to pay some company a small subscription fees and get a good experience atleast. Zerodha Coin, Kuvera, ClearFunds are a few options available in the market.

  • This is indeed a very helpful post on: how to invest in direct mutual funds in India? All details and important points nicely explained here. Mutual funds have surely gained traction since the past few years. Investors have started moving from traditional investment instruments towards other asset classes. Why not? When you get to explore better returns in the long run, one can try different alternatives. Heard of "Don't put all eggs in one basket", the famous quote. This applies to investing also. Rest it all depends on one's risk taking capability and financial goals.

  • PayTM has also come up with direct mutual funds on their platform. The service is being offered to the existing PayTM users gradually. The service can be used free of charge.
    This will give a lot of competition in an already crowded mutual fund market. I hope PayTM stays true to its name and provides a great service.

  • Mutual Funds is a best investing place for the Indians due to its popularity and functionality in the India. It is very easy to take part in it as well due to acceptanceof the very low amounts. A student can also invest in it. So, a viable source of income!

  • @jatinkhanna However Karvy has an updated registration process which is completely online and no hard copies of the documents are required.

    They leverage Aadhaar Digital Signature to open an online account. They just need scanned copy of the bank cheque leaf to create the account.

  • Last time I saw, Karvy didn't allow buying of direct mutual funds. Do they allow now ?

  • This post is deleted!

  • Hi, I think it offers direct fund platform. You can invest in some funds that it supports. Through Karvy app you can transact and manage AMC schemes serviced by Karvy. You can check their site for additional information.

  • Hi,
    I found mycamsonline quite useful for investing in Regular or Direct mutual funds.
    I could see 14 AMC's listed there.
    Here you can do everything related to investment in Mutual Funds and SIP in listed AMC's.
    Mycamsonline is quite a simple way to manage most of your mutual fund investments.

  • @prateek No Doubt that CAMS is a great tool. Just that its UI is not that modern but mycams app is good enough though. You can buy both direct and regular funds but who wants regular funds these days anyways .. 🙂

  • Sure you have a point.
    Everybody who understands difference between regular and direct mutual funds wants direct only.
    But, there are few friends of mine not knowing the difference, who fell to trap of a brokers who intentionally made them enter ARN while registering mutual funds online.

  • @prateek Well the brokers need to adapt and slowly the regular mutual funds will go away. Anyways have you tried Zerodha coin or unovest for investing in direct mutual funds ?

    I heard that unovest is run by Nikhil Khandelwal who himself is an RIA. Have you tried any of them ?

  • A lot of direct mutual fund platforms are popping up clearfunds, groww, upwardly, unovest, kuvera, BharosaClub, moneyfront, orowealth, wealthpedia, jama to name a few. These are supposed to provide a better interface, usability and customer support as compared to Govt instis/RTAs

    There are Govt institutes or other approved bodies(KRAs/MF own investing platform) as well that let you invest in direct funds like MFUtility, CAMS, Karvy. The choice of mutual funds in CAMS/karvy is restricted to mutual funds that these people serve(CAMS seem to let you invest in the karvy funds as well though).

    MFs own investing platforms are restricted to their own funds. e.g on SBI transaction platform you can invest only in SBI funds.

    Then there are bigger brokers like Zerodha Coin coming as well to fray.

    So you have quite a few choices in how to invest in direct mutual funds. I personally doubt the business model of direct fund only platforms so I personally invest with zerodha coin as they seem to have a better business model and business can stay long. Please note that if the business closes, you will need to shift your funds to the other platform which can be cumbersome.

    Just my thoughts, please do your own research before investing.

  • @jatinderchd

    I personally doubt the business model of direct fund only platforms

    This is the reason I rely more on mycams as other platforms somewhere have to sell something so that their business goes on.

    Nice analysis and information.

  • @prateek I wonder if you have tried any of the modern platforms like Orowealth, Zerodha coin etc.

    Also, does mycams support all the funds ? The funds by Karvy, Franklin and Sundaram as well because the RTA of those funds is not CAMS ?

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