Direct Mutual Funds are best for investment. Direct mutual funds always give better return compared to regular mutual funds because of the lower expense ratio. So, it makes a sense to consider direct mutual funds as an investment option. However, very few people know about Direct Mutual Funds Platforms and How to invest in Direct Mutual fund online? Let’s try to understand the concept of Direct mutual funds.
What is Direct Mutual Fund?
Direct Mutual fund means an investor can buy this fund directly. No need of any agent or middlemen. Let me explain. When you decide to invest in mutual funds you have two ways of making Investment.
(1) Invest via distributor or advisor
In this investment option, distributor or advisor will provide assistance in the selection of mutual funds and earn commission or fees.
(2) Direct Mutual Fund Investment
Direct Mutual Funds schemes allow you to purchase mutual funds directly from the fund house. No intermediator or distributor comes into the picture. i.e. Investments under this scheme is not routed through a distributor and you can save commission or fees.
Advantage of Direct Mutual Funds –
- Direct Plans are cheaper than the Regular Plans. No distribution fees, a commission shall be charged on the direct plan hence, the said plan shall have lower expense ratio.
- NAV of Direct mutual funds is higher. This means when you invest you will get more units of the fund.
- Overall returns in case of direct mutual funds will be higher compared to regular mutual funds.
Disadvantage of Direct Mutual Funds –
- Documentation is a big problem. For each investment, you need to maintain complete documentation.
- In case you are not aware of online purchase, it will be a problematic situation for you.
- No Investment advice is offered. You are taking purchase decision on your own.
Direct Mutual Funds Platforms for Online Investment in India
After understanding the concept of direct mutual funds, let’s take a look at a list of Direct Mutual Funds Platforms for Online Investment in India.
Respective AMC websites
The first method to invest in Direct mutual funds is via websites of respective AMC. All AMC websites allow purchase, redemption and switching of Fund online. The services offered on the website is completely free. However, you need to remember login information of every AMC website.
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Through Register Transfer Agents
The second method is via registered transfer agents. CAMS & Karvy act as RTA of these mutual funds. If you invest via RTA you need to remember information about only one or two login account. Investment in all fund house is not be possible via CAMS and Karvy.
Through Demat Account
As of today, only Zerodha is supporting direct mutual fund investment via Demat Account. This is done via coin platform of Zerodha. The services offered by Zerodha is chargeable.
Robo Advisor website and Apps
There are multiple Robo Advisor Website and App that offers direct mutual fund investment. Some of them also offer a paid advisory services. The good part is rich user interface and anytime access. However, you need to pay fees for availing these services. Some popular Robo Advisor Website and App are Invezta, Kuvera, Expowealth and Piggy.
Direct mutual funds are suitable only for DYI (Do yourself Investor). If you are a hardworking investor with deep knowledge and understanding you can select the direct mutual fund for investment. If you don’t want to take hassle of doing investment or if need an advisor for the investment you should stick to regular mutual funds.
Hope you find above information useful. Do share your queries in comment section I will be happy to answer that.