Mutual Funds

How to invest in mutual fund direct plans

Kumar Shankar Roy BL Research Bureau | Updated on February 12, 2021

Make sure you have adequate knowledge before you sidestep intermediaries

If you have adequate knowledge about a mutual fund product or have taken the guidance of a good advisor, you can directly invest in mutual funds, sidestepping intermediaries. What you save in the form of costs, you gain in returns over the long term. Here are a few ways you can invest directly in funds. Before doing so, remember that first-time MF investors are required to complete their Know Your Customer (KYC) formalities.

Fund house

Each mutual fund house has its own website or mobile app from where you can buy their respective schemes. The process may slightly vary across fund houses. Typically, once your KYC is complete, you need to register for an account with the fund house by filling out your personal details.

Once you have selected the fund to invest in, you can select the ‘Direct Plan’ and make the payment. The downside here is that you will need to remember multiple login credentials in case you choose to buy different funds belonging to different asset management companies (AMCs).

You can overcome this by using platforms such as MF Utilities (MFU) or by transacting through a registrar.

MF Utilities

MFU is a shared services initiative by the MF industry. On the platform, a customer can transact in multiple schemes across fund houses in a single window and make a single payment. Through the eCAN facility (tinyurl.com/MFUCAN), eligible investors can submit self-attested data and electronically open a Common Account Number (CAN).

The eCAN will be activated in one business, after which you will be able to transact. Once you log in, add the mutual fund schemes to your cart, much like online shopping, and then pay using a convenient mode.. You can also use the MFU mobile app — goMF.

Registrar

Mutual fund registrars such as CAMS and KFintech also facilitate online investing in mutual funds. However, you must note that the investment options will be limited to the mutual funds registered with each registrar.

About 16 fund houses are registered with CAMS and nearly two dozen with KFintech. You can visit their websites/apps to invest. Franklin Templeton Mutual Fund operates through its own registrar.

Other modes

Platforms such as Paytm Money, Groww and Kuvera enable investing in direct mutual fund plans at no cost to the investor. You can invest in funds that are available on the respective platforms. For example, Kuvera says it offers funds from 39 fund houses.

These platforms are better than the ones provided by MF registrars, who only sell the funds theyservice.However, not all online platforms offer direct plans.

For instance, many banks offer an option to invest in MF schemes on their internet banking portals. Financial intermediaries, including banks, are essentially mutual fund distributors, and hence cannot sell you direct plans on their web portals. The same is the case with intermediaries/brokers who provide online platforms for investments.

These days mutual funds can also be bought through WhatsApp and SMS facilities, if you are an existing customer of a fund house. Usually, one can perform lump-sum and SIP transactions through WhatsApp. If you are not an existing customer, you can access generic information and FAQs on WhatsApp.

SMSes are to be sent in pre-defined formats from registered numbers to the AMC-specific SMS number to execute a transaction.

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on February 12, 2021
  1. Comments will be moderated by The Hindu Business Line editorial team.
  2. Comments that are abusive, personal, incendiary or irrelevant cannot be published.
  3. Please write complete sentences. Do not type comments in all capital letters, or in all lower case letters, or using abbreviated text. (example: u cannot substitute for you, d is not 'the', n is not 'and').
  4. We may remove hyperlinks within comments.
  5. Please use a genuine email ID and provide your name, to avoid rejection.