Mutual funds offer two types of plans: Direct and Regular. Regular plans involve middlemen to buy mutual funds while direct mutual fund plans do not have any middlemen, ensuring no commission is charged which leads to higher returns than regular plans. Direct mutual fund plans were introduced by SEBI in 2013 and since then they have become quite popular. All things considered, the question arises is how to invest in direct mutual funds?
How to invest in direct mutual funds?
There are primarily two ways to invest in direct mutual fund plans: Online and Offline. Before starting to invest, the first step is to decide which scheme do you want to invest in and taking a closer look at the details of the scheme.
Best Ways to invest in direct mutual fund plans online
Online mutual fund investments are effortless, hassle-free as you do not have to be present at the place physically.
There are various options to invest online:
- Tarrakki app
- Asset Management Company’s website
- Registrar and transfer agents’ website
#1. Tarrakki app
Tarrakki is a SEBI registered investment advisor app that you will be able to find on Play store (Android) and App store (IOS). This app has all the direct mutual funds at one place, saving your time and effort to go on different mutual fund websites or to the AMC offices of mutual funds. Since Tarrakki is not a broker/distributor, there is no commission or transaction charge involved.
Tarrakki makes investing simple as the process of investing on the app is paperless and commission free. The KYC verification process on the app is entirely paperless, users need to enter their PAN after which the app checks as to whether they are already KYC compliant or not. In a case when the person concerned is already KYC verified no more action is required and he or she after providing bank details and begin their investments. While, when the PAN number is not KYC verified, the process has to be completed by furnishing Aadhaar details. The eKYC process requires no physical documents and verification is completed via Aadhaar-based one time password (OTP).
The app’s user interface is designed in such a way that it makes investing faster. Moreover, many other actions can also be performed on the app including redeeming your investments, adding money to your existing investments, tracking your investment portfolio, finding detailed information related to all the direct mutual funds, setting automated SIP. Tarrakki accepts payment mode such as UPI (Google Pay, Phonepe and more), Net banking which makes the investing process much faster.
#2. Asset Management Company’s website
If you select this mode, first you need to select the fund you want to invest in and then visit its website. Once you do that, you will need to open an account with the website and then feed in all the relevant information. After this, you need to select the scheme you would want to invest in. Further, you have to select Systematic investment plan (SIP) or Lumpsum, and then enter the amount you want to invest. Further, you will have to select the mode of payment and place your order.
#3. Investment through Registrar and Transfer Agents’ website
One can also invest in mutual funds through CAMS or Karvy’s website. Once you decide which mutual fund scheme you want to invest in, it needs to be ensured that the mutual fund scheme is registered with CAMS or Karvy only then you can invest through this option. The steps are similar to investing through the AMC’s website.
Best Ways to invest in direct mutual fund plans offline
- Asset Management Company’s office
- Registrar and Transfer Agents (RTA) office
Step 1: First you need to visit nearest office of Asset Management Company (AMC) whose funds you want to invest in. To find the nearest branch of the AMC, go on this AMFII’s website Association of Mutual Funds in India (amfiindia.com) and search for the city with the name of the AMC you want to visit.
Other option is to visit the local office of RTA’s (Registrar and Transfer Agents) such as CAMS and KARVY who provide services to the investors on behalf of the mutual fund houses. You can locate the center of CAMS in your city on Mutual Fund & SIP Service Centre | Locate CAMS Office Near You (camsonline.com) and Karvy on Locate Us | Karvy Corporate.
Step 2: Submit KYC (Know Your Customer) form. Getting your KYC done is mandatory for all first-time mutual fund investors. You need to submit the self-attested copies of the following documents along with the KYC form.
- An identity proof (Aadhaar card, Passport, Voter ID, or Driving Licence, Bank statement)
- Self –attested PAN card
- An address proof
- A passport-sized photograph
Step 3: For all mutual fund investors, undergoing an In-Person Verification (IPV) is mandatory as per the norms of the Securities and Exchange Board of India (SEBI).Your AMC will re-validate the KYC info you have submitted. IPV can be done in two ways:
You either need to physically meet the official representative from the fund house or distributor with all the original documents.
Or, you can complete the IPV via video conferencing using a webcam at a pre-agreed time with the concerned intermediary.
Step 4: After the IPV process, you need to Common application form or SIP form. If you decide do an SIP, you will also need to fill a NACH Mandate (National Automated Clearing House), which gives the Asset Management Company permission to auto-deduct the SIP amount from your linked bank account from the starting date of SIP. Along with this, you will also need to write a cheque or demand draft in the name of the AMC of the desired investment amount. You will be allotted the folio number for the investments made and an account statement once the transaction is initiated.
Offline investing is slightly time consuming and for every action such as redeeming your funds, making a new investment or stepping up your SIP you will need to visit the AMC or RTA’s office physically.
Direct mutual funds have surged in popularity as there is zero commission involved which leads to earning extra returns. Before investing one should check all the advantages and disadvantages of regular and direct mutual fund plans. Investing online is much quicker and easy way as it’s paperless, digital and can be done sitting at home.