Posted on October 19, 2021 @ 11:45 am
Direct Plans of Mutual Fund– Hello friends, today we will talk about “How to Invest in Direct Plans of Mutual Fund Schemes”.Mutual Fund Direct plans are for those who prefer to invest directly rather than through a distributor. In comparison to standard plans, they benefit from a lower expenditure ratio. This reduced expense ratio results in increased long-term returns. So let’s take a closer look at it.
How to Invest in Direct Plans of Mutual Fund Schemes
If you are a do-it-yourselfer, you can invest in mutual fund direct programmes (do-it-yourself investor). It enables you to make direct investments with the asset management firm (AMC). Direct mutual funds, as opposed to normal plans, must be invested in because they have a reduced expense ratio.
The AMC saves money on commissions paid to mutual fund distributors and brokers, which it passes on to investors. The word ‘direct’ is affixed to the names of direct funds, making them easily identifiable.
You’ll notice that a direct fund’s portfolio is identical to that of a normal fund. It is managed by the same fund manager and invests in the same securities as the other funds. If you are familiar with mutual funds and can conduct research, you can invest in direct funds. It also allows you to lower your expense ratio and get a larger return than traditional mutual fund plans.
Through the fund house, you can invest in direct mutual fund schemes. You must go to AMC’s website and complete your KYC (Know Your Customer). If you have completed KYC, follow these steps to invest in direct mutual funds online.
One can invest by physically filling out a mutual fund application form and writing “DIRECT” in the blank place provided for the distributor’s ARN on the form. If the ARN is already filled in on the form, the investor can strike it out and put “DIRECT” in bold on top of it. For further processing, submit the application form along with the investment item to the nearest mutual fund branch or RTA office.
Switching to Direct Plan
Investors can also fill out a switch request to change their present investments from a regular to a direct plan. This can be accomplished both online and offline. Switching units effectively entails the redemption of existing investment and the purchase of new investment and is consequently taxed as such in terms of capital gains tax and exit loads
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Invest in Direct Funds Through Registrar and Transfer (R&T) Agents
R&T agents may be able to help you invest in mutual funds online. You can only invest in direct funds that are registered with these agencies, though. You can invest in direct funds as a flat sum or as a systematic investment plan (SIP). Registrar and Transfer (R&T) Agents can let you invest in direct funds at a minimal cost.
Use Mutual Fund Utilities to Invest in Direct Funds
As a shared platform for several AMCs, you have mutual fund utilities. To transact in mutual funds from multiple AMCs, you must first register an account with the mutual fund utility. The expense of the internet platform is split among mutual fund companies.
- With mutual fund utility, you must create a CAN (Common Account Number), a unique reference number. Your mutual fund folios are mapped across AMCs using the Common Account Number, giving you a consolidated view of your investment.
- The mutual fund utility then prompts you to register an account. It allows you to invest in direct funds from several AMCs using a flat sum or a systematic investment plan.
- You’d have to submit your investment information and execute the transaction.
If an investor is unfamiliar with mutual funds and need assistance in selecting the appropriate investment, it is best to invest through a regular plan and a competent distributor.
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What is the best way to invest in direct mutual funds?
You can invest in a Direct Plan online through the websites of the mutual funds, or through online platforms of stock exchanges, Mutual Funds Utility (MFU), or other digital channels. There are a few online portals that allow you to invest in Direct Plans as well.
Which platform is best for investing in mutual funds directly?
Groww- Direct Mutual Funds App.
ETMONEY Mutual Fund App.
myCAMS Mutual Fund App.
KFinKart- Investor Mutual Funds.
Paytm Money Mutual Funds App.
KTrack mobile app by Karvy.
What is the Direct Plan of a Mutual Fund?
A direct plan is one that you purchase from a mutual fund firm directly (usually from their own website). A Regular plan, on the other hand, is one that you purchase through an advisor, broker, or distributor (intermediary). A typical plan has a higher expense ratio in mutual fund terms.