Direct mutual funds since they were introduced by SEBI in 2013, have been gaining steady popularity over the years.
With zero involvement from middlemen, direct funds ensure the amount you would have otherwise paid as a commission is saved and is added to your returns. That being said, the important question now is, how to invest in direct mutual funds in India.
Turns out there are various ways you can do so based on your preference. Here are the modes available, read on!
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How To Invest In Direct Mutual Fund Plans?
Investing in mutual fund-direct plans can be done in two modes primarily – the offline mode and the online mode. Direct mutual funds are the answer to how to invest in mutual funds without paying commission.
Before you begin, the first step is to choose the mutual fund you want to invest in. This involves knowing the mutual fund type and the asset management company (AMC) the fund belongs to.
Its also important that you keep in mind the amount you want to invest in the scheme, based on your goals and whether you want to go with a systematic investment plan or make lump sum deposits.
Both processes require you to finish certain mandatory steps, let’s see what each method entails.
How to invest in direct mutual funds online?
If you would rather not take the hassle of a physical visit, you can buy direct mutual funds online. It is, undeniably more convenient.
As a first-time mutual fund investor, you need to look after the KYC formalities here as well. This is a one-time process; thus, you can use this information across all platforms to invest in Direct Mutual Fund Plans. Your PAN is crucial here, as all MF Companies check if your KYC details are linked with your PAN.
You can invest in your desired Direct Mutual Fund investment schemes online in several ways – with the Asset Management or Mutual Fund Company or with the Registrar & Transfer Agent (R&TA).
Each method is discussed below.
1. Investment In Direct Mutual Fund Through The Asset Management Company Website
Similar to the offline method, you first need to choose a Mutual Fund Scheme and then visit its official website. Follow the steps mentioned below to proceed.
- Open An Account With The AMC
Firstly, you need to set up an account with the Mutual Fund House or AMC. Details you need to provide here are similar to what you would in an application form. But the process of registration might vary from one AMC to another.
- Select The Scheme
It is the most crucial step in direct investing. Under the option of “Plan type” choose “Direct”. Then choose the scheme in which you want to invest and under which option you want to initiate your investment. Here, you have two options – Dividend and Growth. Consider which would suit your investment objective and choose accordingly.
- Choose Investment Details
- Select other important investment details which include –
- Systematic Investment Plan (SIP) or Lump-sum
- Demat or No Demat
- Whether a Registered Investment Adviser is helping you out or not – RIA Code
- Mode of payment
- Bank name, bank account number, IFSC, account type and confirm the details.
Next, you need to verify the details you have entered in the above step. Make sure to check that all details are in line to avoid any hassles later.
Some AMCs might need you to validate application form submission with an OTP. It will be sent to your registered email id or mobile number.
Lastly, conclude the transaction by making the necessary payment via the method you had chosen when filling up your details. Once done, a confirmation will be forwarded to your registered number or email ID.
2. Investment in Direct Mutual Fund Scheme Through A Registrar And Transfer Agent
If you are windering how to invest in direct mutual funds through Karvy or CAMS, hthe steps are discussed below,
You can also choose to invest via a registrar such as Karvy or CAMS. However, you need to ensure that the Mutual Fund Scheme you want to invest in is registered with the respective registrar. In case it is not, you need to invest through the avenue mentioned above. The process is similar to investing through an AMC website.
You can also invest in Direct Mutual Fund Scheme through online platforms run by SEBI-Registered Investment Advisers.
Advantages of investing in direct mutual funds online
- Online investment is less time-consuming.
- It opens you up to a variety of mutual fund schemes that remain limited when you choose the offline mode.
- Once KYC details are updated, you can use it to invest in multiple Direct Mutual Fund schemes across different platforms.
- Also, when you register yourself with an AMC, you do not need to repeat the same in the future if you need to invest in any MF scheme from that company.
How to invest in direct mutual funds offline?
If you have any reservations about investing online and prefer the traditional route, you can go with the offline method. The offline method is where you have to physically fill and submit a mutual fund form.
Step 1: The first way is to visit the nearest office of the asset management company whose fund you have selected.
Once you reach the center you would be asked to complete your KYC ( Know Your Customer) process if you are not KYC compliant. The KYC document can be procured at the AMC branch itself. You would also have to carry a few other documents for in-person verification purpose, these include:-
- Self-attested copy of PAN
- Self-attested copy of address proof. For address proof you can use either of these documents -passport copy, latest telephone bill ( landline or mobile), latest electricity bill, latest bank passbook, bank account statement, latest Demat account statement, driving license, rent agreement, ration card.
- You also need to submit something known as a Common application form or SIP form. If you decide the SIP route you will also need to fill a NACH Mandate (National Automated Clearing House), which will give the asset management company permission to auto-deduct the SIP amount from your linked bank account from the starting date of SIP.
- Once you submit the requisite forms and documents, you would also have to submit a cheque or demand draft in the name of the AMC of the desired investment amount. You will be allotted the folio number for the investments made and an account statement once the transaction is initiated.
You can expect a similar process at the local RTA office as well. Please note, offline methods to buy direct mutual funds require you to physically visit the branch and fill forms for any action that you would like to take with your investments such as redeeming fund units or stepping up SIP amount, etc.
Disclaimer: The views expressed in this post are that of the author and not those of Groww.
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