Here’s How To Invest In Direct Mutual Funds

You can invest in mutual funds (MFs) either through an intermediary or buy a direct plan. Direct plans allow investors to buy MFs directly from the fund house, without involving any distributors. This eliminates commission costs and results in lower expense ratio, which in turn improves the long-term returns for investors. They were first introduced by the Securities and Exchange Board of India in 2013.

The portfolio, fund manager and investment plan of a direct MF is the same as those of regular plans; the only difference is the cost.

You can invest in direct MFs either online, or offline by visiting the fund house or registrar offices.

Direct plans are more cost-efficient for investors but are meant for investors who have either the time of knowledge to do their own research and maintain discipline.

They may not be the right choice for investors with beginner-level experience, who may require guidance on the choice of schemes and fund houses. It is important to evaluate the schemes as well as factors such as your investment goals and risk appetite.

However, the best course of action would be to consult and advisor and then invest in a direct MF on your own.

Step-By-Step Process To Invest In Direct Mutual Funds Online

Investing in direct MFs is a simple process. You can invest directly from the website of the fund house or through the website or app of the registrar and transfer agents. Some platforms also offer these services with nominal charges depending upon the portfolio size. Here’s how one can do it easily

1. Login into preferred broker or MF app

Login into the website or app of a broker, registrar, or the fund house of your choice. You can also invest through the Association of Mutual Funds in India or registrar and transfer agents (RTAs) such as CAMS.

2. Complete KYC for MF app or website

In case of a fund house you have not invested with earlier, you will need to fill in your basic details and complete the know your customer (KYC) process. You will need digital copies of your permanent account number (PAN), identity proof and address proof, among others. 

If you are already a subscriber of the broker or RTA, they will have your details stored, and you can directly click on their mutual fund dashboard and start investing.

3. Fill in your bank and nominee details

In case of a mutual fund, fill in your bank details like account number and IFSC code. You will also need to furnish the nominee details. Your broker account will already have these details. 

4. Make payment, set SIP mandate

You can either invest a lump sum or open a systematic investment plans (SIPs), just like in a regular plan. Lump sum investments are one-time, whereas SIPs allow you to invest at regular intervals in a disciplined manner.

5. Make payment, set SIP mandate

Go to the payment step. You can use Netbanking, Unified Payments Interface (UPI) or other methods. For SIP, don’t forget to set up the autopay feature from the same app.