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How To Invest In Direct Mutual Funds?

Looking for ways to invest in direct mutual funds? This blog will help you understand how to buy direct funds offline and online.
July 27, 2021

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Mutual funds that can be bought directly from an asset management company like SBI, HDFC, Mirae, Kotak, and others are known as direct mutual funds. 

They have a lower expense ratio because there’s no commission fee involved. This brings down the cost of investing. In this blog, we’ll walk you through the offline and online methods of buying direct funds.  

How To Invest In Direct Mutual Funds Offline?

You can invest in direct funds offline by visiting the branch of an AMC or registrar. First, you’ll have to select which AMC you want to visit. There are approximately 44 AMFI registered AMCs that includes:

There’s the alternative of visiting a registrar like CAMS or Karvy. Registrars help AMCs by maintaining detailed records of MF transactions. In either case, this is what you’ll have to do:

  1. Visit branch (AMC/Registrar)
  2. Get the application form
  3. Provide documents for KYC
  4. Select direct mutual fund scheme(s)
  5. Choose investment type: lump sum or SIP 
  6. For SIP: Include NACH mandate form
  7. Submit the document

How To Invest In Direct Mutual Funds Online?

Investing in direct funds online offers greater flexibility. You can either choose to invest in direct funds online through the website of an AMC, Registrar/Transfer Agent, or investment apps

These are the documents you’ll need before you can start investing in direct funds online:

  • PAN card
  • Aadhar card
  • Bank account details

The funds can be transferred using net banking, debit card, NEFT, or IMPS. Once you have all this handy, you can start investing in these 3 ways. 

1. AMC

  • Create account
  • Select mutual fund plan (Direct)
  • Choose investment type (Lump sum/SIP)
  • Select Holding Type (Demat/Non-Demat)
  • Choose a mode of payment
  • Enter bank details
  • Complete the payment 

2. Registrar

The process of investing in direct funds online through a registrar is more or less similar to an AMC. However, you’ll only be able to access mutual funds offered by the Registrar’s AMC partners. 

The two leading Registrars in India are Karvy and CAMS. You can invest in direct funds through their website that includes options like lump sum payments, SIPs, and others. 

Karvy’s AMC partners include:

  • Axis Mutual Fund
  • Baroda Pioneer Mutual Fund
  • BOI AXA Mutual Fund
  • Canara Robeco Mutual Fund
  • DHFL Pramerica Mutual Fund
  • Edelweiss Mutual Fund
  • Essel Mutual Fund
  • IDBI Mutual Fund
  • Indiabulls Mutual Fund
  • INVESCO Mutual Fund
  • JM Financial Mutual Fund
  • LIC Mutual Fund
  • Mirae Asset Mutual Fund
  • Motilal Oswal Mutual Fund
  • Principal Mutual Fund
  • Quantum Mutual Fund
  • Reliance Mutual Fund
  • Taurus Mutual Fund
  • UTI Mutual Fund

CAMS AMC partners include:

  • Aditya Birla Sunlife Mutual Fund
  • BNP Paribas Mutual Fund
  • DSP Blackrock Mutual Fund
  • HDFC Mutual Fund
  • HSBC Mutual Fund
  • ICICI Prudential Mutual Fund
  • IDFC Mutual Fund
  • IIFL Mutual Fund
  • Kotak Mutual Fund
  • L&T Mutual Fund
  • Mahindra Mutual Fund
  • PPFAS Mutual Fund
  • SBI Mutual Fund
  • Shriram Mutual Fund
  • Tata Mutual Fund
  • Union Mutual Fund

You’ll notice that certain fund houses like Franklin Templeton are missing from both lists. That’s because they have their own Registrars. 

3. Investment Apps

There are several investment apps in India that allow you to invest in direct funds online. Broadly speaking, this is what the process looks like:

  • Download the app
  • Create an account
  • Complete the KYC process
  • Select direct funds yourself
  • Start investing

As you can tell by now, you’ll have to buy direct funds based on your own judgement and understanding of the financial markets.  

What Are The Other Ways To Invest In Direct Funds?

There’s a platform called Mutual Fund Utilities that allows you to invest in direct funds online and offline. There are several AMCs that have partnered with MF Utilities. 

The platform allows you to buy mutual funds offered by AMCs like Edelweiss Mutual Fund, Canara Robeco Mutual Fund, Motilal Oswal Mutual Fund, and others.

The process is, again, more or less similar to investing with any AMC or Registrar. Except for a few additional requirements. 

  1. Create a Common Account Number 
  2. Fill in the required information
  3. Additional: fill up and submit the PayEezz form
  4. Start investing

The PayEezz service is native to Mutual Fund Utilities. An investor can use it to authorize future payments to MF Utilities. It’s a one-time mandate that makes it simpler to transfer funds in the future. 

Should You Invest In Direct Or Regular Mutual Funds?

It’s important to note that direct funds were intended for relatively experienced investors when they were introduced in 2013. The reason? The amount of research involved. 

Direct funds do offer a lower investment cost and potentially higher returns. However, investors must do their own research thoroughly before selecting a direct fund. 

This can, as any investor would tell you, be a tough task. Research would be across micro and macroscopic factors. Furthermore, you’d have to evaluate your own risk profile and investment goals. 

Only then can you figure out which direct fund scheme out of the 100+ available would be right for you. This isn’t the case when it comes to regular funds. 

Apps like Cube curate regular mutual funds that are handpicked by industry experts Wealth First. This can help you invest in mutual funds that are right for you. Plus, the burden of choice is exponentially less.   

Conclusion

Investing in direct funds is possible offline and online. If you’re taking the offline route, you’ll have to physically travel to an AMC or Registrar to select and invest in the direct mutual fund of your choice.

Online allows you to invest from wherever you are using the website of the AMC, Registrar, or various investment apps. You can even use the Mutual Fund Utilities platform to invest in direct funds offline or online.  

Read other popular how-to stories:

1. How To Invest In Stocks For Beginners

2. How To Buy Digital Gold Online

3. How to Save Money From Your Salary?

4. How to Build the Perfect Investment Portfolio

5. How To Achieve Financial Freedom In India?

Shriram Shekhar
Shriram is a Consultant at CubeWealth. He has developed cutting edge IT products for over 2 years before turning to his passion for the written word. His love for philosophy, developing products, and empowering people through quality content is what got him to CubeWealth.

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