Zerodha, the discount brokerage house, has launched a mutual fund platform (Coin) for investment in direct plans of MF schemes. This is yet another portal for investing in direct plans of mutual fund schemes.
Let’s look at some of the aspects that you must consider before deciding if you should sign up for Coin.
What is the cost involved?
The cost is quite attractive.
You do not have to pay anything till such time your total investment does not exceed Rs 25,000.
Once you exceed the limit, you will have to pay Rs 50 per month. This adds up to Rs 600 per annum. And Rs 600 is irrespective of your portfolio size.
This is one of the cheapest options that you will get for Direct MF investments.
As far as I know, only MF Utility is cheaper. MFU comes free of cost, at least for now.
What are the clear Pros?
Zerodha is an established name. It has been providing low cost services to traders and investors for many years.
There are many portals that have come up in the last few years that let you invest in direct plans. I am not sure how many of them will survive. And this is a cause of worry for many investors. By the way, you do not have to worry about your investment portal shutting down. Even if the investment platform closes down, your MF units are completely safe.
However, if you are still worried about this while choosing your investment platform, Coin from Zerodha may be a good choice. I expect Zerodha to be around for a long time.
What are the Cons?
The units have to be held in demat account.
You will have to open a demat account through Zerodha. This seems to be a pain point. If you already have one, you can start investing in Direct plans of MF schemes.
When I opened demat and trading account with Zerodha many years back, they used to open demat account through IIFL. Now, if I have to use Coin, I need to open a new demat account (and possibly close the older one).
There will be minor charges for withdrawing MF units from your demat account at the time of redemption. But it can cause a hit if your redemptions are frequent and of small amounts.
What do I think of “Coin”?
The biggest drawback of MF Utility is that its interface and data presentation is quite primitive. You can’t even see how much you have invested. You can only view the current value. Though there are other ways to figure such things out, many investors (and even some of my clients) are not very comfortable with such interface.
For such investors, Coin is an option worth exploring.
With MFU, you can even transact in your holdings you purchase through any other mode (physical or through another online platform). Not such benefit with Coin. You can only view investments that you made through Coin. By the way, all investment platforms are like this only (MFU is an exception).
Please understand this is not a recommendation to use Coin from Zerodha. I am also NOT saying that Coin is better than other direct plans investment platforms. Quite possible other platforms are better than Coin.
Just that I have used Zerodha for a few years and have been quite satisfied with their services. And that’s what got me excited when I heard about Zerodha launching a direct plan platform.
I have not used “Coin” myself . Nor do I plan to sign up for it in the near future. I can manage with MF Utility. You have to decide for yourself. It is quite possible that Zerodha may have done a very shabby job with Coin though I don’t expect this to be the case. You need to decide for yourself.
Moreover, since I have not used Coin, I may not be able to answer your queries pertaining to Coin. You can post your queries on Zerodha website.
For those who do not know about Zerodha, Zerodha started as a low cost discount brokerage. And it has given incumbents (brokerage arms of banks and prominent brokerage houses) a serious run for their money. So much so that the bigger houses had to run to the regulator complaining of predatory pricing by various discount brokerages such as Zerodha.
Good for the investors. Where bigger brokerage firms charge up to 75 bps per transaction for delivery, Zerodha does not charge anything for delivery based trades.