The answer is an unequivocal yes. You might have to do a bit of running around initially but the excess returns will more than compensate for it. Go through this post to know more about direct plans of mutual fund schemes and how direct plans offer better returns than regular plans. For equity funds, the excess return of direct plans ranges from 0.25% to 1% per annum. This can cause a huge difference in the long term. The excess return is lower for debt funds.
I have received a lot of queries from a number of investors asking whether they should switch their investments from regular plans to direct plans. The answer is Yes. However, there are certain costs attached with switching of units from regular plans to direct plans. Such costs must be considered before making the decision. There is another common confusion about how direct plans offer better returns despite having a higher NAV than regular plans. Read this post to find out how this happens.
Switch from regular to direct plan is considered as redemption from regular plan and a fresh investment into the direct plan of the mutual fund scheme. This gives rise to certain costs. Let’s see how these costs can affect your decision to switch to direct plans.
Costs associated with redemption of mutual funds
- Exit load: For equity funds, there is a penalty that the fund house imposes for withdrawing from the fund too early. Typically, the fund houses charge up to 1% of the redemption amount if you redeem within 1 year.
The extent of load and duration (up to which exit load is charged) varies across funds. A few funds charge exit load if you exit within 3 years. So, you are advised to check such conditions for your fund before you make the switch.
- Capital Gains Tax: If you redeem equity mutual fund units within 1 year (3 year for debt funds), the resulting gains are treated as short term capital gains. If you redeem equity fund units after 1 year (3 years for debt funds), the resulting gains shall be considered long term gains.
For equity funds, short term capital gains are taxed at 15% while long term capital gains are exempt from tax. For debt funds, short term gains are taxed at your marginal income tax rate (income tax slab) while long term gains are taxed at 20% less indexation. For more on taxation of mutual fund units, please go through following post.
Apart from these costs, Securities Transaction Tax (STT) is also charged on sale of equity fund (and not on debt funds). However, the impact is much lower as compared to exit load and capital gains tax.
Additional Point to note
Each installment of a Systematic Investment Plan is considered a fresh investment for the purpose of exit load and capital gains. Let’s assume the exit load in your fund is charged at 1% for redemption within one year.
Let’s assume you have started a SIP in the equity fund on October 15, 2015. You make monthly investments on 15th of each month. Units purchased through installment on October 15, 2015 can be sold on or after October 16, 2016 to avoid exit load and capital gains tax. Units purchased through installment on November 15, 2015 can be redeemed on or after November 16, 2016 to avoid any exit load and capital gains tax.
You can see every installment (through SIP or otherwise) is considered a fresh investment. You must keep this in mind.
Additionally, you can not switch units in ELSS (equity linked savings schemes or tax saving mutual funds) before completing 3 years. The reason is switch is considered sale of regular plan units and purchase of direct plan units. Since you cannot sell ELSS units before 3 years, you cannot switch before 3 years.
If you are in the negative (loss) on your MF investments, there will no capital gains tax implication. However, exit load implications will still be there if you redeem within specified period.
What should you do?
- Stop SIP in the regular plan of the MF scheme. Start SIP in the direct plan.
- For the regular plan units that have already completed their exit load period (and do not have adverse capital gains tax implications), you can switch those units to direct plan.
- For the remaining regular plan units, you can wait till the exit load period gets over. Subsequently, you can switch to direct plans.
Image Credit: Simon Cunningham, 2009. You can download the original image and information about usage rights from Flickr/Lendingmemo
100 thoughts on “Should you switch from Regular plan to Direct plan of MF scheme?”
I do agree that going the direct mode gives more returns. But it makes it more difficult to keep track of our investments. Is there a way to keep track of our investments in the direct mode? Also, while rebalancing our portfolio we would be left to fend for ourselves without an advisor’s help. Is there a way to overcome this?
You can use your PAN details to register on CAMS and Karvy (RT agents) and get consolidated statements for AMCs serviced by these AMCs. Apart from Franklin Templeton, almost every big AMC is serviced by these two agents.
You won’t be left to fend for yourselves. You can talk to a fee-only planner or a SEBI registered investment advisor. They will help you rebalance and charge some fee. You don’t need to pay a percentage (indirectly) of your portfolio for this limited periodic advice. Hope the answer helps.
Thanks, Deepesh. Helpful answer it was. I invest in MFs directly now. Was thinking of switching to Scripbox because of the rebalancing they offer. Hence the question 🙂
Also Building a replica of your portfolio could help. One can do that on MoneyControl.com . It is just that you have to manually enter the details of your investment and it will show you your growth and everything
Thanks for the input, Gaurav.
You can also download transaction statement from CAMS/Karvy/Franklin websites and import portfolio in ValueResearch.
Hi Aravind,
I too recommend to go with Neutral advisers. And I am telling this from my experience. This way you will get unbiased advice which will help you achieve your goals rather than MF agent’s goals.
By the way I am already a proud customer of Personalfinanceplan.in & their comprehensive plan helped me in having a plan with optimized asset allocation so that my goals can be achieved
Nandan, Thanks for the kind words!!!
Sir presently I am investing in axis long term direct growth plan.. But actually axis long term equity regular growth plan is ranked number one by crisil.. So could u please guide me as to whether I shall stop investing in the direct plan and start investing in regular plan which is number one.. Or continue with the same
Vasudev, continue with direct plan. Direct plans are cheaper i.e. they offer better returns than regular plans.
Hi!
As per the latest Budget is switch from regular plans to direct plans of the same scheme not covered under taxation rules…Pl confirm?
Thanks
Minoti
Hi Minoti,
Switch from regular to direct plan (even in the same scheme) is considered exit from regular plan and fresh investment in direct plans.
Hence, capital gains tax and exit load implications will be there during such switch.
Have gone through your post on switching regular plans to direct plan with much interest. I am an invester and will be happy to know more about the actual modalities of switching my portfolio from regular plan to direct plan. My query is for shifting my portfolio do I have to redeem the mutual funds or there is a way to shift without physical redemption.
You can do it online. Register on the AMC website as as existing investor and you can do it subsequently.
You can also call up customer care of the AMC and ask them to switch. You will have to confirm some personal information for verification.
Switch is equivalent to redemption followed by fresh investment.
“Additionally, you can switch units in ELSS (equity linked savings schemes or tax saving mutual funds) before completing 3 years”?
Should be “can not” right?
Rectified. Thanks Santosh for pointing out. Appreciate it.
Your inputs are vital to the health of this blog. Keep them coming.
In case of an ELSS where I am already invested for over a year, I want to stay invested in the same fund without asking for redemption until 3 years are completed but want my future SIPs to become direct from existing regular ones.
Or say I stop SIP { regular mode} for a month and then restart the SIP afresh in the same fund but this time in direct mode.
Will I still be liable to pay exit load and short term capital gain tax in the above scenarios?
Exit load and capital gains tax are applicable on redemption of MF units.
By stopping a SIP, you are not redeeming but are only discontinuing further investments. That is not redemption.
No exit load or capital gains tax implication on stopping SIP.
Hi Deepesh,
I had invested in Axis Long Term Equity Fund (ELSS) in jan 2013 through a distributor. it more than 3 years now. If i switch to Direct plan of same fund, will i be able to claim the same as deduction under 80C.
Or i have to redeem it and make a fresh investment under direct plan.
Please suggest.
Hi Mital,
Switch is equivalent to redemption from Fund A and investment in Fund B.
So, your switch from ELSS-regular plan is a redemption followed by investment in direct plan.
You will get tax benefit for investment in direct plan under Section 80C even on switch.
No need to redeem and subsequently invest.
Thank you so much for your reply.
Hi Mr. Deepesh,
I had invested in HDFC Mid Cap Opportunities Fund on June 2014 and after that I made some additional purchases till Jun 2016 under Regular Plan Growth and now have 4200+ units in all. Only this July(2016) I switched (3000 units invested upto July 2015) to Direct Plan Growth. Remaining it’s there in the Regular plan itself. So if I want to redeem the Direct Plan fund amount to reinvest in some other fund will the AMC charge exit load as I had switched only on July 2016 citing that it has not completed one year. So if I have to escape from the exit load should I wait till Jul 2017 to complete the tenure? Please clarify. Thanks in advance.
Dear Prakash,
Switch is essentially redemption from regular plan and fresh investment in direct plan.
Hence, exit load will be applicable if you redeem direct plan units within 1 year from switch date.
Hence, if you want to avoid exit load, you will need to hold on till July 2017.
Not just that, even short gains capital gains tax at 15% will be applicable if you sell before July 2017 (of course only if you make profit).
Thank you very much Mr.Deepesh…
You are welcome, Prakash.
Please do share the post with friends and family.
Hi Deepesh,
I am a new investor in mutual fund.
I started the sip through a “AGENT” in icici prudential elss 10000, balanced fund 10000, balanced advantage fund 15000, icici multi-cap lump-sum 50000.
ICICI savings fund 110000(debt).
I started the sip from august 22nd only one due completed.
I dont want to exit from the existing fund because as per your reviews i have to pay more charge if i do so.
So my question is , Is it possible to stop further SIP investing in regular plan and to switch it in Direct plan of same funds.
Is those funds are recommended for Long Term?
Please advise me . Its helps in investment growth.
Thanks in advance,
Venkatesan.
Dear Ventakesan,
SIP is merely to invest in mutual fund schemes.
If you stop SIP, you merely stop further investments in the schemes. You are not redeeming/selling any MF units.
Exit load or capital gains tax is applicable only at the time of redemption.
Hence, you can stop SIP in regular plan and start SIP in direct plan.
Would suggest do not limit yourself to just one AMC. Invest in schemes from other AMCs too.
Thank you very much Deepesh. Thanks for your quick reply. I will stop the sip in regular plans. i will start in Direct plan.
Please advice some good funds from different AMCs.
I started the account in Myuniverse from Birla.Is it possible to invest in multiple AMCS funds from that tool. Else Please suggest a good one.
Thanks again.
With MyUniverse, you can invest in schemes from multiple AMCs but you will be able to invest only in regular plans.
You can try out MFUtility.
http://www.personalfinanceplan.in/mutual-funds/how-to-register-with-mf-utility/
Please understand I provide investment advice only on a professional basis.
You can visit the Offerings section for more details.
http://www.personalfinanceplan.in/our-offerings/
Hello Dipesh
How to stop a SIP and start a new one ? means it is like auto debit from bank how is the process to stop?appreciate your help. Thank you
Hi Surya,
You can stop online from the portal (where you started the SIP from).
You can stop debit mandate too. But it is better if you cancel through the portal too.
You can start a new SIP from the same portal.
I am in new in investment of mutual funds
My agent has started my SIPS in Reliance tax saver elss regular plan
i am in little doubt about the mf.
Is the MF Good ?
If the investment horizon is long term, you can invest in equity funds.
Reliance Tax Saver is a decent fund.
I have invested in IDFC PR. Eq. regular plan from 2007 to 2012 and have about 1800 units. Since 2012 I have shifted to direct plan in the same portfolio. Can I switch the accumulated regular fund units to direct plan how..Are there any tax implications.
If the last purchase in regular plan was in 2012, there will not be any tax implication on switch to direct plan.
i observed in case of HDFC i am holding two fund HDFC tax saver under regular and direct mode. usually direct use to ahve higher NAV but now days seen that direct mode fund holding is having less NAV than regular. how is it possible..
Dear Narendra,
I can see the NAV of direct plan is greater than regular plan. Can you please recheck?
DEAR Raghav
My concern is that I have invested in sip of two mutual fund and I want to switch from equity to debt because market is high and I am getting gud return in one year.
But I am looking for long term investment and if I switch from equity to debt if market is high and if market go down than again switch from debt to equity.
I want to know that whether if i apply this type of strategy than it will impact my long term objective or not and this strategy possible in sip or not.
For example I have invested Rs.1000 in sip and my total investment is 12000 and valuation of sip is 15000,it is possible to switch Rs.3000 from this scheme and move to debt or liquid scheme and if market go up than again move fund to equity in same scheme.
Or I will impact my long term objective or not..please let me know.
Dear Sugam,
You are thinking about timing the markets. Many have tried and failed.
It is quite difficult.
So, what you are saying is technically possible but it is very difficult to implement practically.
DEAR Raghav
My concern is that I have invested in sip of two mutual fund and I want to switch from equity to debt because market is high and I am getting gud return in one year.
But I am looking for long term investment and if I switch from equity to debt if market is high and if market go down than again switch from debt to equity.
I want to know that whether if i apply this type of strategy than it will impact my long term objective or not and this strategy possible in sip or not.
For example I have invested Rs.1000 in sip and my total investment is 12000 and valuation of sip is 15000,it is possible to switch Rs.3000 from this scheme and move to debt or liquid scheme and if market go up than again move fund to equity in same scheme.
Or I will impact my long term objective or not..please let me know.
Email- sugam2410@gmail.com
Dear Raghav,
Presently i have 4 SIP under diffferent AMCs, all of them are regular plan which i started in Mar 2015. After completion of 1 year i switched all SIPs from regular to direct plan. I thought that future installments would be under direct plan, but it wasn’t the monthly SIPs is still under regular plan.
Now what should i do
1. stop the SIPs, keeping invested money in those regular plan allow them to grow and start a new direct plan.
2. Reedem the money and invest whole amount in direct plan.
3. Carry out switching the plan to direct plan every year.
what would you advice, which would be beneficial (considering exit load and capital gain tax) pl help. thank you.
Stop SIPs in regular plans. Hence, no further investment in regular plans.
Start SIPs in direct plans.
You can switch once your regular plan investments are an year old.
I’ve a doubt regarding the 2nd point from your article….
****For the regular plan units that have already completed their exit load period (and do not have adverse capital gains tax implications), you can switch those units to direct plan.****
If I’ve 500 units in a fund of which 100 units were purchased during last 12 months, now if I submit a switch request of 400 units, will they switch the first 400 units or the 400 units from the recent date?
I hope you get my point! Thanks in advance
Redemption is first in first out.
Hence, older units will get switched first.
Hi Deepesh
I recently started my sip on 20th Oct for 20k .Sip auto debit date is 5th which has also not started pending with bank it seems.After starting I came to know the difference of regular and direct funds.I want to shift to direct fund but not sure of the way.Should I transfer from regular to direct by contacting each 4 Amc or stop the sip and start will each Amc.which will be more economical? Thanks.
Also I am already in loss of around 700 in total for the funds..Is it the right time to switch ?
Dear Krishna,
Equity markets are quite volatile. So, you must live it.
Not sure if you are considering tax loss harvesting by booking short term capital loss.
Dear Krishna,
You will have to stop SIPs in regular plans.
Subsequently, you can start SIPs in direct plans.
You can shift from regular to direct after 1 year so that you can avoid exit load and capital gains tax, if any.
You can stop SIPs by contacting your distributor or through AMC. There is no charge for stopping SIP.
Hi Deepesh
I am a beginner can you please tell me from where I can invest in direct fund and please do help I have 27 lakh I have decided to invest 9 lakh each on three top balanced fund comparing their growth and expense ratio is it a good choice?
Hi Karn,
Suggest you go through the following post for how to invest in direct plans of MF schemes.
http://www.personalfinanceplan.in/mutual-funds/you-can-get-discounts-on-mutual-fund-investments-too/
Can’t comment. A lot depends on what you are investing for.
If you can’t decide on your own, seek professional help.
Hi Deepesh
Is it possible to stop regular plan SIP & start new SIP in same fund with Direct plan & redeem regular plan SIP amount once your SIP comes under long term capital gain (LTCG) ?
instead of paying short term capital gain, exit load & switching formality ?
Yes, very much.
Hi Deepesh, I am looking to invest some money in balance fund for monthly income and capital appreciation over a longer term. While doing some research, came across HDFC Prudence fund, which pays regular monthly dividend and has a good long term track record. How ever little confuse if it make sense to invest in regular plan or direct plan in case of dividend option. More so looking @ NAV differential of 14% between regular plan and direct plan. Monthly dividend payout is same besides for the month when they pay some extra lump sum in good time. Where divided pay out in regular plan is much larger vs direct plan.
NAV as on 06th Jan 2017
Regular Plan – 29.25
Direct Plan – 33.478
Given this facts can you please advise, what should I be doing?
Dear Mittal,
This is due to the way dividend is distributed. Dividends can only be paid from surplus or profits generated.
Since direct plans came in force only in January 2013, the accumulated profits can likely to be much less than regular plans, which have been around for a long time.
For instance, suppose both regular and direct plans had NAV of Rs 60 as on Jan 1, 2013. In direct , there was no surplus (because it came into existence the same day). At the same time, surplus of regular plan would have been much higher. Even though the direct plans have been able to pull away in performance, it is not enough to make up for years of surplus created in regular plans.
In my opinion, you can do as well with growth option. You just need to wait an year and then redeem as and when needed.
sir I am new to mutual funds but after doing some researching online, I have decided to buy hdfc mid cap opportunity direct fund growth, so I went to nearest hdfc bank and ask one employee of bank and he said yes I can invest in mutual funds from the bank, after one hour I have decided to invest in mutual funds, so I said him I want to invest in direct plan growth, frankly the employee doesn’t have much knowledge about mutual funds compare to me, after all paper works and form fill up, I before leaving I said again that I want to invest in direct plan growth and I mention it in form also but after two days I got a message saying Rs. 2000 deducted for investing in hdfc mid cap opportunity regular plan, so I went to bank and ask the reason they said direct plan can be only open from concerns amc offices or online, so now what should I do, I am confused please email me your kind suggestions in my email tukasikom. ts@gmail. com pls I need your help
Dear Tuka,
With banks, you will only get invested in direct plans.
Bank official was right. You need to visit AMC office, or CAMS office or you can invest in direct plans online.
When should you switch —I mean when market is high or when low
Does not matter.
How can I change from growth plans of Scripbox to direct plans of MFUtility. I haven’t completed a year still.
Direct plans are suited to those who can research and review portfolios.
Do keep this aspect in mind.
Btw, there is no such thing as “Growth plan of Scripbox” and “Direct plans of MFUtility”.
Hi Deepesh,
I have plans follow as,
Axis long term equity – elss – sip
Franklin India prima plus – lumpsum
Tata balanced fund – lumpsum
Uti midcap fund – lumpsum
All above funds are direct growth plans.
As im new invester in mutual funds i don’t have idea to change direct plans. Is this possible to change now? If so can u help me in detail.
Hi Karthikeyan,
You mentioned you are already investing in Direct growth plans.
If you are already in direct plans, you need not switch.
How did you invest in these schemes?
Yes, you can switch even if you have invested in regular plans.
Sorry deepesh. I have wrongly mentioned as direct. All above is regular growth plans. I invested through karvy value services branch near by my home.
Karthikeyan,
There are many ways.
Firstly, you will need to stop SIP in regular plans. You will need to start fresh SIP in direct plan.
For switching to direct plans or starting SIP, you can do in one of the following ways.
1. You can go to AMC office or CAMS/Karvy offices and fill up forms for switch and starting SIP.
2. Go to AMC website, register and switch online. You can start a SIP online too.
3. You can do this on CAMS/Karvy websites.
4. You can register on aggregator platforms like MF Utility.(www.personalfinanceplan.in/mutual-funds/how-to-register-with-mf-utility/)
5.There are many other portals that let you invest in direct plans (but these come with a fee). On such portals, you will not be able to switch existing investments. You can only make fresh investments.
Do note Karvy (that I mention) is a RT agent. Karvy you are working with is a distributor (I think).
Additionally, please understand direct plans are meant for Do-it-yourself investors.
If you think you can’t select funds suited to your goals, I will advise you to consult a SEBI Registered Investment Adviser (and subsequently invest in direct plans).
Thankyou deepesh. I can go through your ways and suggestions then proceed further. Thanks for the help.
You are welcome, Karthikeyan.
A small request. Please share the post with the friends on Facebook and Whatsapp.
Hii deepesh sir ji namaskar,
Sabse pahle logo ka margdarshan karne ke liye aapka bahut bahut dhanyawad aur shubhechcha.
Sir ji , mere 2 elss ke investment hai sip mein.
Regular plan ko direct me karna chahta hoo jaise ki aapne bataya mutual fund utility ke saath.
Sir ji , jo maine 6 month ki sip invest ki ha, kya wo direct plan mein same folio mein continue ho jayegi agar ho jayegi tho kitna samay lagega
Kyunki maine sip stop kar di hai lekin direct plan ka investment karna baaki hai kripya aapki salaah ka ntzaar hai.
सुनील जी,
आपका धन्यवाद. आपसे विनय करूंगा की अपने मित्रों के साथ यह पोस्ट Facebook और whatsapp पर शेयर करे|
elss में तीन साल का लॉक इन होता है. तो आप तीन साल से पहले अपने regular प्लान से स्विच नहीं कर सकते|
हाँ आप उसी फोलियो में स्विच कर सकते हैं. लेकिन तीन साल के बाद|
Hello Sir
Please tell me, is it possible to make personal changes in mutual funds one is investing like in Address n nominee n Pan card details.?As if I only make changes in my bank account will work?
Thank you
Aneeta
Hi Aneeta,
Yes, you can change address and nominee. Why will PAN change?
Hi Deepesh,
I have 2 funds wherein I invested lumpsum for couple of months (16,000 in total). Now these funds are temporarily suspended and do not take the fresh investment anymore. So I have an option to redeem or hold. I would like to know what should I do in such case or still there is any way to switch to direct plan (note: I have called up AMCs and they have advised to redeem or hold)?
Thanks in advance for your guidance,
Hemanshu
Hi Hemanshu,
It is your choice. You can redeem or hold.
If taxation is a convcern, wait for a year in case of equity fund and 3 years in case of a debt fund.
Hello Sir,
I am new in Mutual fund investor. I have invested SIP in four mutual funds in last 22nd September 2017 through agent. They are 1. SBI Blue chip (G): 2000/-, 2. Aditya birla sun life equity fund (G): 2000/-, 3. Axis long term equity :2000/- and 4. Reliance tax saver (ELSS) :2000/-.
Sir please tell me, I am selecting the wright mutual funds or not ?
According to review, can I change regular plan to direct plan right now ?
Please suggest me.
Thanks
Hi Ranjan,
Difficult to comment on the choice of funds unless I know more about you.
About switch to direct, here is what you should do.
Stop SIP in regular plan.
Start SIP in direct plan.
After 1 year, switch investment in regular plan to direct plan.
Thank you sir
I want to invest more in SIP. Please suggest me new fund or invest more in exiting funds.
Hi,
My query is to understand if I can claim tax exemption for switching funds from DSP Black Rock Money Manager fund to DSP Black Rock Tax saver fund.
My company finance team says that I can only claim tax exemption for ELSS funds if it is a SIP and not if it is a switch.
If I can claim tax exemption please provide the official website where it says an investor can claim a tax exemption even with a switch, so I can forward to my finance team.
Thanks
Rohit
Hi Rohit,
Even switch to ELSS counts as investment and can be claimed for tax benefit under Section 80C.
I am quite surprised your corporate finance team needs a proof for this. You don’t have official notification for each and everything.
Many things are implicit.
Thanks for the reply Deepesh, I have replied the same thing back, let’s see what they come up with. As per the finance team, they say “Please note as per the policy and process we have with Income tax department we are authorized to provide exemptions only for the purchase values and not for the Switch in & Switch out value.”
I’ve asked the team for an official income tax directive which says the same but I don’t expect to receive an positive response from what they replied above.
Thanks
Rohit
Hi Rohit,
Switch is merely for convenience and ease of transactions.
From taxation and exit load perspective, a switch is same as redemption from existing fund and a fresh purchase in the new fund.
If your accounts team does not give tax benefit, you can always claim at the time of filing tax return.
Btw, there is one simple solution to the problem.
You can drop an e-mail to AMC and seek written response. The same response you can forward to accounts team.
Hope your accounts will accept formal response from AMC.
Hi Deepesh,
The accounts team has rejected the claim stating the company policy does not allow for switch to be considered as tax exemption. However I got another answer, which is the same as you said, I can claim when I file the tax returns. That’s the only other solution left in this case I guess.
Thanks
Rohit
Hi Rohit,
In that case, you can claim at the time of filing returns.
Hello Sir,
I have invested SIP in four mutual funds in last 22nd September 2017 through agent and one mutual fund direct. They are 1. SBI Blue chip (G): 2000/-, 2. Aditya birla sun life equity fund (G): 2000/-, 3. Axis long term equity :2000/-, 4. Reliance tax saver (ELSS) :2000/- and Reliance small cap Direct (G) :1000/-
Apart from, I have PPF, SUKANYA, Atal Pension Yojana (both me and my wife), LIC (38,000/- per year; 7 premium have paid).
Details:
My Age:35+
My Income: 60,000/- per month (Salary, Private)
One daughter: 4 Months
Monthly expenditures : 20,000/-Approx.
Future plans:
1. Buy car after 1 or 1 year 6 months: 5 lakh (Approx.)
2. Purchase Land after two years: 15 Lakh (Aprox.)
3. Plan of my Baby Girl (Education and Married).
According to my profile, please suggest me, I am selecting the right funds or not ? Also I want to invest more in which funds ?
I have switched sip from regular to direct plan of hdfc midcap opportunities growth via camsonline but still sip deducted for the regular plan.
Doesn’t switch from regular to direct means stopping of the regular plan and starting of the direct plan?
If not then how to stop the regular plan from camsonline or any other online way?
Hi Vishal,
SIP is never switched. Only the investment is switched from regular to direct.
Here is what you need to do.
1. You need to stop SIP in regular plan.
2. You need to start SIP in direct plan.
3. Switch units from regular to direct.
You need to stop SIP from the platform you started it.
Got it.
Thank you, Deepesh.
Hi Deepesh
I had invested in SL gennext india regular fund for 1 year till Sept 2016. I switched the units to SL gennext india direct fund in Oct 2017. Now while switching, I believe I avoided STT and tax since all the SIPs were more than 1 year old.
Now I want to redeem these units from the direct fund. WIll I incur short term capital gains?
Thanks
Hi Vipul,
Switch is equivalent to redemption in regular plan and subsequent purchase in direct plans.
Therefore, direct plan investment is a fresh investment and will be subject to exit load and STCG if you exit now.
Suggest you go through the following post.
https://www.personalfinanceplan.in/mutual-funds/switch-from-regular-to-direct/
Hi Deepesh,
All my MF investments are through direct mode. But somehow last year my wife opened an SIP with SBI BLue Chip through the bank and hence it started as a regular growth plan.
Moreover the bank has set it up for a period of 12 months initially, and she had to put an application again this year January to continue the same. Now what happened, once we got the acc.statement, the bank at their own discretion split about 1000rs and invest in SBI Contra fund and rest to blue chip. Upon calling SBIMF helpline they suggested to switch units from contra to blue chip and then close the contra fund.
We plan to completely stop both the blue chip and contra as both of them are regular. We will not switch or redeem anything now because of the exit load.
Is it possible that she stop both these regular SIPs and start just one direct plan with the same AMC. Can she open a new folio online? I am afraid that if in online SBI again reallocate the same folio number and converts it to a regular plan. Pl advice.
Regards
Manas
Hi Manas,
Yes, she can start the SIP in direct plan in the same folio.
You can do it from SBI MF website.
Don’t worry. SBI cant change your direct plan SIP to regular.
Hi Deepesh,
Thanks a lot for help. Another question, as I mentioned in 2017 January she opened the regular fund which somehow ceased (by the bank)after one year. Then we contacted SBIMF and they also told that we may not extend that SIP as it is but can open a new one under same folio.
When we tried to do that under same folio as “New Investment” for the same fund, invariably the options led us to the broker code etc. I mean it did not let us to ooen a direct plan.
That’s why I was unsure how to proceed this time. May be we can just open a new folio? I will try and see how it goes.
But we will not switch or redeem the ongoing funds to avoid exit load.
Regards
Manas
Hi Manas,
Not in a position to comment about design or operations of SBI MF website.
You cannot start a SIP in direct plan from bank website. Have to do it from SBI MF site.
You need to select XYZ-Direct plan for investment in direct plan MFs.
Hi Deepesh,
I was usuing SBI-MF website only. Anyway, I think I will start a new SIP with a new folio as a direct investment, as you suggested.
By the way, if you have any article on STP, could you please send me the link.
Thanks again for your help.
Manas
Hi Manas,
I find this strange. Why don’t you write to SBI MF? When you called customer care, typically you get the most convenient answers.
I don’t have a specific post on STPs.
Sir, if I switch my regular plans of SIP to direct plans in the same folio through Cams online, my broker will get intimations or not. Actually, I want to switch in direct plans without informing him.
Hi Amrit,
You can do in CAMSOnline.
He can get hold of the transaction in the regular plan.
So, rather than switching, you can first redeem and then purchase in direct plan.
He will not formally get any info about direct plan investments.
However, if he has contacts in AMC and wants to find out, he can find out if you are investing in direct plans.
Thanks a lot sir. One more question . The SIP I started is one year old and due to present market slowdown It’s value is just near to the cost price. May I redeem it and start a new purchase in direct plan or it will be a loss.
Hi Deepesh,
While the maket is its lowest dip, is it advisable to swith from regular to direct plan. Please let me know.
Hi Tapan,
If you are switching from regular to direct of the same plan, just switch. You don’t have to wait to market levels. The portfolio is the same in both direct and regular plans.
Hi Deepesh,
Could you please comment on my below selected funds. Time Horizon 7+ years. Risk Appetite- High. Investment mode- SIP.
1. Kotak Standard Multicap (2K)
2. Axis Long Term Equity (4K)
3. SBI Bluechip Fund (2K)
4. IDFC Tax Advantage (2.5K)
5. L&T Emerging Business Fund
Looking for your suggestions to make any changes if any. Thanks!!
Hi Tapan,
Request you to work this out with an investment adviser.
Sir, I have few SIPs in MF under regular plan. From the posts it is clear that direct plan is more beneficial for the investor than regular plan. Being direct plan, there is no commission or expense to the broker. So my doubt is still not clear as to how and why the NAV on direct plan is higher than regular plan. Is it necessary to visit the AMC personally or can I do all the transactions online. I have the MFs continuing for more than 3 years and If I switch on to direct plan the entire amount will be continuing as direct plan or it will be fresh start. Also, what would be the approximate charges to switch on to direct plan.