Is a direct mutual fund plan for you?

In a direct mutual fund plan, you can invest your money in mutual funds through a fund house, without the involvement of a distributor, broker or an agent. As you don’t have a distributor, you don’t have to pay a significant commission on your investment, so your expense ratio will be lower. For instance, SBI Bluechip Fund regular plan has an expense ratio of 1.97%, whereas its direct mutual fund plan has a much lower expense ratio of 1.15%, according to Value Research. The net asset value (NAV) of a funds direct plan will be higher compared to the regular plan.

The process

You can buy direct mutual funds online as well as offline. There are multiple platforms to buy online. For instance, you can visit the individual asset management company’s website and fill in your details.

You can also invest via MF Utility, an initiative of the mutual fund industry under the Association of Mutual Funds in India. Another option is to invest through websites such as MoneyFront and BharosaClub.

In case you are looking to invest through the offline channel, you will have to visit the fund house’s office.

Awareness

For all mutual fund investments, you need to do your know-your-customer process. To opt for direct mutual fund investments, either you should be financially aware of it, or you should get a financial advisor to guide you. To pick the right direct plan, understand mutual fund schemes. If you think you can find time to keep track of your mutual fund performance and are not willing to entrust your money with a broker, consider it. If you are not adept with it, you can seek help of a financial advisor before investing in direct plans.

source: livemint


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