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
Save taxes upto Rs 46,800, 0% commission
