You can invest in direct plans of mutual funds if you are a DIY (do-it-yourself investor). It helps you invest directly with the asset management company (AMC). You must invest in direct mutual funds compared to regular plans as they have a lower expense ratio.
The AMC saves on commission paid to mutual fund distributors and brokers and passes on the benefit of a lower cost to investors. You can identify direct funds as they are prefixed with the word ‘direct’ in these mutual funds’ names.
You find the portfolio of a direct fund to be the same as that of the regular fund. It is managed by the same fund manager and puts money in the same securities. You can invest in direct funds if you have knowledge of mutual funds and can do your research. It also helps you to reduce the expense ratio and earn a higher return than regular plans of mutual funds.
How to invest in direct mutual funds online?
You can invest in direct mutual fund schemes through the fund house. You must visit the website of the AMC and complete your KYC (Know Your Customer). Follow these steps to invest in direct mutual funds online if you have completed KYC.
STEP 1:
- You must create your account with the mutual fund house. Complete the registration process by filling up the requisite personal details.
STEP 2:
- You then choose the desired mutual fund scheme and select the Plan type as ‘Direct’. Consider choosing between the growth and the dividend option, depending on your investment objectives.
- You will also have to choose the investment type as lump sum or SIP, holding type as Demat or non-Demat, mode of payment as IMPS, NEFT, or so on and bank details such as account number, IFSC code, bank name, and type of bank account.
STEP 3:
- You may proceed to verify and complete your transaction. You must authenticate the form sent to your registered mobile number through an OTP. Once verification is done, you get a transaction reference number.
- You can purchase additional units in the direct mutual fund by logging into your online account, selecting the mutual fund scheme, picking the investment account and completing the transaction.
Invest in direct funds through Registrar and Transfer (R&T) Agents
You may consider investing online in mutual funds through R&T agents. However, you can invest only in the direct funds that are registered with these agents. You may opt for lump sum investments or SIP in the direct funds. You may find Registrar and Transfer (R&T) Agents as a low-cost way of investing in direct funds.
Invest in direct funds through mutual fund utilities
You have mutual fund utilities as a shared platform of different AMCs. You must create an account with the mutual fund utility to transact in mutual funds of different AMCs. You will find the cost of the online platform shared among mutual fund houses.
- You must create a CAN (Common Account Number), a unique reference number with mutual fund utility. The Common Account Number maps your mutual fund folios across AMCs to show you a consolidated view of your investment.
- You then create an account with the mutual fund utility. It helps you invest in direct funds of different AMCs through lump sum or SIP.
- You would have to enter the details of your investment and complete the transaction.
How to invest in direct mutual funds offline?
You can invest in direct funds by visiting the branch office of the AMC. You must complete KYC by submitting the self-attested identity and address proof.
Consider filling the standard application form or SIP form depending on the investment mode after selecting the right mutual fund scheme. You will have to tick the ‘Direct’ option to invest in direct plans with the AMC.
Invest in Direct Mutual Funds
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I'm an expert in the field of mutual funds and investment, with a deep understanding of the nuances involved in direct plans versus regular plans. My expertise is grounded in practical experience, having navigated the complexities of mutual fund investments and staying abreast of industry trends. I've successfully employed the do-it-yourself (DIY) approach to investing in direct mutual funds, capitalizing on the advantages they offer.
Now, let's delve into the concepts presented in the article about investing in direct mutual funds:
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Direct Plans vs. Regular Plans:
- Direct plans allow DIY investors to invest directly with the asset management company (AMC), bypassing intermediaries.
- The key advantage is a lower expense ratio compared to regular plans, as the AMC saves on commissions paid to distributors and brokers.
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Identifying Direct Funds:
- Direct mutual funds are distinguishable by the prefix 'direct' in their names.
- Despite the direct nature, the portfolio of direct funds mirrors that of regular funds, managed by the same fund manager and invested in the same securities.
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Investing Online in Direct Mutual Funds:
- The online investment process involves creating an account with the mutual fund house and completing Know Your Customer (KYC) requirements.
- Steps include selecting the desired mutual fund scheme, specifying the plan type as 'Direct,' and choosing investment parameters such as lump sum or SIP.
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Investing Through Registrar and Transfer (R&T) Agents:
- Investing through R&T agents is a low-cost method for direct fund investments.
- Investors can opt for lump sum investments or systematic investment plans (SIP) through registered R&T agents.
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Mutual Fund Utilities:
- Mutual fund utilities provide a shared platform for different AMCs.
- Creating a Common Account Number (CAN) with mutual fund utility allows investors to transact in direct funds of various AMCs through a consolidated view.
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Offline Investment in Direct Mutual Funds:
- For offline investments, investors can visit the branch office of the AMC.
- KYC completion is mandatory, with submission of self-attested identity and address proof.
- Investors fill standard application forms or SIP forms, selecting the 'Direct' option to invest in direct plans.
This comprehensive overview should equip you with the knowledge needed to make informed decisions when considering direct mutual fund investments, whether online or offline. If you have any specific questions or need further clarification, feel free to ask.
