In a series of posts on this blog, I have highlighted how you can enhance your mutual funds by investing in direct plans of mutual funds schemes. Under direct plans of mutual fund schemes, you bypass intermediary and invest directly with the fund house. Since there is no intermediary involved, there is no intermediary and that adds to the returns. Everything else remains same between Direct and Regular (through intermediary) plans of MF schemes.
The drawback with direct plans was that you had approach each AMC in online or offline mode to invest in direct plans. This was a deterrent to a number of investors. Subsequently, MF Utility came into picture and you could transact in direct plans of multiple MF schemes from a single interface or form. However, the operations were permitted only in Offline mode till December 31, 2015.
From January 1 2016, MF Utility has gone online. You can transact in direct plans of MF schemes sitting in the comfort of your room with only a laptop in hand.
Additional Read: Should you switch from Regular plans to Direct Plans of MF schemes?
Additional Read: Common Doubts about Direct Plans of MF schemes
Additional Read: You can get discounts on MF Investments too
Here is how you can register with MF Utility and start transacting online.
What is MF Utility?
MF Utility (MFU) is an initiative by Association of Mutual Funds in India (AMFI). MF Utility is owned by MF Utilities India Pvt. Ltd, which is equally owned by 25 participating asset management companies (mutual fund houses). All the major mutual fund houses are participants in MF Utility. MF Utility offers a transaction interface to both MF distributors and investors.
With MF Utility, you can transact in MF schemes of participating mutual funds from a single interface or form.
However, till the end of 2015, you could transact in Direct plans of mutual funds in offline mode only. From January 1, 2016, you can transact in online mode too. This should be a cause of great cheer among investors in direct plans.
Before MF Utility, such investors would have to approach each AMC separately (through online or offline mode) and subsequently invest in direct plans. Of course, they could have invested in offline mode through MFU.
Now that online platform for investment in direct plans has been launched, you can transact online from a single interface.
MF Utility is free of cost for investors.
How do I transact through MF Utility?
You need to register for CAN by filling in CAN registration form. CAN stands for Common Account Number. CAN is a unique identifier issued by MFU. For more on CAN, go through the following link on MFU website.
Must Read: MF Utility is a win-win for investors
Apart from this, you also need to register for ECS mandate for Systematic Investment Plans SIP transaction. You can do that by filling and submitting PayEezz registration form. You can do purchase transaction using NetBanking too. However, if you want to register for SIPs, you need to do PayEezz registration.
To sum up, here is what you need to do:
- KYC (not required if you are already KYC compliant)
- CAN registration
- PayEezz Registration
- Request for online access (more on this later)
Here is how you can do it.
If you are KYC Compliant
You need to go to MF Utility website and fill an online form. You can access the online CAN registration form at this link. You start with your e-mail id and follow the steps. The entire form is quite self-explanatory. After filling in the form, you can download pre-filled form and take printout.
For the PayEezz registration from, you can download from MFU website. There is no online form. You will have to specify bank details in this form. There are a few other fields which are self-explanatory.
You need to submit filled-in CAN registration and PayEezz registration forms along with self-attested copies of PAN card, cancelled cheque (which bears your name) and KYC Compliance letter (or so they call it).
For the KYC Compliance letter, you can go to this link in CVL website. Enter your PAN and you can verify your KYC status. You can take printout of the page. This will work as KYC Compliance letter.
You can also download CAN registration forms and PayEezz registration forms from MF Utility website and fill them using pen.
How do I get online access?
Online access is not default under MF Utility. This means you won’t get online access details after registration of CAN. You will to ask for access.
Once your CAN is generated, you can drop an e-mail to firstname.lastname@example.org requesting them for online access. You will get access in a couple of days.
You will be sent a link where you can select your login id and password and you are good to go.
I was KYC compliant. Hence, there was no need for KYC compliance.
I followed the same procedure as mentioned above (mailed documents to MFU) and got CAN (through SMS and e-mail) within 3 days. I mailed MFU for online access and got access within a few days. The entire process was quite smooth and hassle-free. I had to step out only to courier the documents.
What do I do if I am not KYC Compliant?
You need to complete KYC. You need to visit MFU POS with your KYC documents (photograph, PAN, address proof, cancelled cheque) and finish KYC process.
You can submit CAN registration and PayEezz forms at the same time.
Experience with MF Utility Portal
This is fairly subjective.
You can see your earlier investments under MF Utility and can even transact (redeem/transact) under those funds. You can transact under the same mutual fund folios. Once the PayEezz registration is done (takes up to 3 weeks), you can also register SIPs. So, on the transaction front, it is quite good.
Not so nice when it comes to presentation of information. The interface is not as sleek as I would have wanted to. For instance, I can only see the number of units I hold in scheme (and not the value of those units). I cannot see the profit and loss for each of my investments. I cannot see the total size of my portfolio. So, there is a lot of scope for improvement.
Hopefully, the interface will improve over a period of time.
In my case, I can manage with the current interface. You have to decide for yourself.
Would suggest you register with MF Utility and then take a call if you want to continue.
Update (October 5, 2016): How to purchase Mutual fund units using MF Utility portal?
Direct plans of MF schemes are the best suited to Do-it-yourself investors who can research and pick mutual fund schemes are per their requirements. Such investors can avoid intermediary costs by investing in direct plans of MF schemes.
In a number of MF portfolios of clients I analyze, I see no structure or purpose or planning. MF schemes picked up randomly because a friend or a relative mentioned it. There is no linkage to financial goals. If such investors go direct, they won’t do much better. A few basis points of extra returns (over regular plans) will be more than nullified by poor choice of funds and lack of application and discipline.
Here is what you should do:
- If you have time and skill to research MFs and pick schemes suited to meet your goals, go DIRECT. MF Utility is a good option.
- You shore up your skills and knowledge about Mutual Fund Investments. You can read popular personal finance blogs and read personal finance sections in business newspapers regularly. Over a period of time, you will develop skill and confidence to research MFs and invest on your own.
- Seek services of a SEBI-registered investment adviser, pay a fee and seek investment advice. You can subsequently invest in direct plans of MF schemes.
- Get in touch with a mutual fund distributor, seek investment advice (for free) and invest in regular plans of Mutual Fund schemes.
To note: MF Utility is not the only portal that lets you invest in direct plans of MF schemes from multiple mutual fund houses/AMCs. There are many portals that have come up recently such as Invezta, BharosaClub, UnoVest, OroWealth etc. I am sure many more are in the offing.
I have not tried these portals myself. However, you can give these portals a try. Do note these portals won’t be free of cost. These portals will have a fee structure. It is justified too. After all, they need to make some money. MF Utility, on the other hand, is free of cost (at least as of now).
What are your plans? Planning to register with MF Utility
Disclaimer: I am a SEBI registered investment adviser and have a conflict of interest in recommending you services of a SEBI registered investment adviser.
Latest posts by Deepesh Raghaw (see all)
- Review: LIC Jeevan Umang - June 22, 2017
- How much do I need to Invest per month to accumulate Rs 1 crore? - June 20, 2017
- Financial Planning For Retirement vs. Financial Planning During Retirement - June 14, 2017
- The Problem lies not with the Investment but with Investor Expectations - June 12, 2017