The awareness about direct mutual funds (or direct plans of mutual fund schemes) is increasing.
And why not?
You stand to earn higher returns for no additional risk.
It is foolish to invest in regular plans if you are a do-it-yourself investor. You are compromising on returns for no hint of advice.
Even for those who need assistance, it may be a good choice to work with a SEBI RIA (or a fee-only financial planner) and subsequently invest in direct plans (especially if you have a big portfolio). Please appreciate the conflict of interest since I am a SEBI RIA.
Now the question, How to invest in Direct Mutual Funds online? Direct plans of mutual funds save you cost while online investing provides you convenience.
I have compiled a list of various online mutual fund direct plan platforms or websites in India. You can try out these portals and choose the one that fits your requirements the best.
Best Mutual Fund Direct Plan Platforms/websites in India
Here is the list (in alphabetical order except for the first two entries) of direct plan platforms in India.
- Respective AMC websites
- MF Utility ( I use MF Utility)
- Piggy (App only)
- PayTM Money
- Zerodha Coin
NRIs can also register on these platforms to invest in direct plans of mutual fund schemes.
Some of these platforms may also permit investments in regular plans too. Therefore, ensure that the scheme you purchase has “Direct” appended to the scheme name.
Please understand this is not an endorsement of any of these portals. I have not really used out any of these portals (except MF Utility). For a few others, I have had just a cursory glance.
Moreover, I have no plans to compare these portals anytime soon. I have merely compared the costs below for some of the portals(but the cost alone can’t be the criterion). You need to decide the right portal for you. Better to go with a popular one.
Do note even if your platform were to close down, your investments will still be safe.
Direct plans are best suited for Do-it-yourself (DIY) investors. If you can’t select the right funds for you on your own and struggle with investment discipline, it is better to seek advice from a SEBI Registered Investment Advisor (SEBI RIA) and subsequently invest in direct plans.
Fees/Charges of Direct Mutual Fund platforms/websites
These direct plan investment portals have different business models. A few charge a flat fee while others charge on a per transaction basis.
You do not have to pay anything for transactions through MF Utility, CAMSOnline or respective AMC websites.
Many of these portals are built upon MF Utility and hence can only allow investments with mutual fund houses that are onboard MFU.
PayTM has launched a free direct plan platform in PayTM Money. Many direct plan platforms have gone free to avoid obsolescence.
Unlike many regular plan portals, these direct plans platform may not have strong marketing budgets. And there is a clear reason for this.
For instance, a regular plan platform will earn ~Rs 50,000-Rs 1 lacs per annum from your investment worth Rs 1 crore (assuming 0.5%-1% commission income). On the other hand, the direct plan platform will not earn more than Rs 2,000 per annum for the same or even bigger portfolio.
The earnings may vary based on the business model. Therefore, these platforms need to keep their costs under control.
Which is the best direct mutual fund website/platform for you?
You can try out these portals. Almost all the portals offer a free trial period.
I would prefer a platform with good support.
I expect all the portals to offer similar features. Don’t think they can do much beyond a point. Many of these portals may choose to display very complex information but I believe much of it won’t be any use for MF investors.
If you were to choose between various pricing models, then you can take a call based on your transaction pattern. By the way, investment in direct plans of MF schemes is already saving you a lot of money.
If you do multiple transactions of small values, portals that charge per transaction fee can be very expensive for you. A flat fee model may be a much better choice. For instance, if the portal charges Rs 99 per purchase transaction and you make a purchase of Rs 5,000, you are immediately incurring an upfront cost of 2%.
On the other hand, if you do only a few transactions (set up SIP and forget about it), per transaction fee may be cheaper for you (unless there is a minimum annual fee that the website charges).
Do a bit of simple maths. You will find an answer (if cost is a concern).
Can I switch/convert from regular mutual funds to direct mutual funds using these websites?
Well, that depends on whether your existing investments are visible on the platforms. Your older investments will be visible on AMC websites, CAMS/Karvy portals and MF Utility. You can shift to direct from such platforms. Even those websites that use MF Utility as the transaction platform, you can switch from regular to direct. More on this topic in this post.
Cost Comparison (Charges comparison) Mutual Fund Direct Plan Websites
These are the direct plan platforms I am aware of. There could be many more. If you are aware of any other such portals, please let me know in the comments section.
Disclosure: I am registered on MF Utility as a SEBI RIA and help clients with online transactions on MF Utility. Since MFU is an enabler in providing services to my clients, you can expect me to have a bit of soft corner towards MF Utility.
The post was first published in May 2017 and has been updated since.
Book Suggestion: Bogle on Mutual Funds: New perspectives from the Intelligent Investor (John C Bogle)