direct-mutual-funds

How to invest in direct mutual funds? Advantages of direct mutual funds

In the previous article, we discussed how much salary to invest in mutual funds. In this article, we will discuss how to invest in direct mutual funds

Mutual funds are the best way to peek into different and top-performing securities without constantly researching and handpicking them. It allows individuals the flexibility to invest and maintain excellent returns. It invests in stocks, bonds, and equities by pooling money from different companies. 

Under this, an investor buys shares either directly or through a broker. The price that an investor pays per share is the net asset value plus other fees. Mutual funds are redeemable, which is one of their best features. An investor can sell the securities anytime, and the fund generally transfers the payment within seven working days.  

 Direct and regular mutual funds make investing in mutual funds easier. 

The blog talks about how to invest in direct mutual funds carefully. So, if you are worried about how to buy mutual funds directly, the blog is worth a read.

What do direct mutual funds imply?  

Direct funds are those offered by the fund house or Asset Management Company. AMC invests funds from clients by utilizing capital by investing in liquid assets like Stocks, bonds, real estate, and partnerships. 

In “Direct” mutual funds, no third party intervenes in the transaction, and the investor directly interacts with AMC regarding the funds. Since the fund eliminates any third-party interaction, there are no brokerage fees or commissions here, and it is the primary difference between direct and regular funds.

How do direct mutual funds differ from regular funds?  

Direct and Regular Funds are the two options for investors to invest in mutual funds. These two differ drastically. The table below can be useful if you’re having trouble deciding which to pick. 

Direct mutual fundsIndirect mutual funds
In this, the investor directly deals with AMC to purchase funds In this, the broker connects the investor with AMC
An investor can purchase an investment plan directly from the website The broker helps investors to pick the best plans. 
Direct Mutual Funds do not provide any facilities. The broker helps the investor with the account setup, documentation, and other legalities. 
No brokerage fees.The broker charges fees for his expertise and assistance. 

The Total Expense Ratio (TER) and Net Asset Value (NAV) are significant parameters that investors must check before choosing the proper funds. 

What are some tangible advantages of direct funds? 

  • These funds have a lower expense ratio that translates into higher returns. 
  • It keeps compounding for several years  
  • It is better than reserving funds under the same scheme 

Figure out the best way to invest in a direct fund and multiply your wealth. 

how to invest in direct mutual funds
Source: pixabay

Top 8 mutual funds to invest in India in 2022? 

Are you searching for the best direct mutual funds to invest in India? Check this out! 

As per Economic Times’s June 2022 research, the best mutual funds to invest in are: 

  1. Parag Parikh Long Term Equity Fund 
  1. Axis Bluechip Fund 
  1. Mirae Asset Large Cap Fund 
  1. Kotak Emergency Equity Fund 
  1. UTI Flexi Cap Fund 
  1. SBI Small Cap Fund 
  1. SBI Equity Hybrid Fund 
  1. Axis Midcap fund 

Before exploring investment schemes in direct mutual funds in India, check the category and investment objective. 

Now, let‘s analyze the best strategies to invest in. 

3 best ways to invest in direct mutual funds 

You can invest in direct Mutual Funds both ways, online and offline. Invest online if you wish to avoid the hassle of conducting physical visits. 

You will need to meet the KYC eligibilities before investing. You must attach the following documents to become KYC compliant: 

  • Identity proof (Aadhaar card, driving license, or Voter ID) 
  • A PAN Card 
  • Address proof 
  • A passport-size photo 

You can invest in Direct funds via many options. 

Investment in Direct funds through AMC 

To invest in this, choose the scheme you like. Post that follows the below steps: 

  • Step 1- Make an AMC account 
  • Step 2- By choosing Plan Type as “Direct,” select the scheme 
  • Step 3- Choose between Dividend and Growth. Choose according to the investment objective. 
  • Step 4- Select investment Plan or Lumpsum 
  • Step 5– Select between a Demat account or trading without one 
  • Step 6- Choose the payment Mode 
  • Step 7- Confirm the bank details- IFSC code, account number, account holder name, and account type 

Verify the details, and you are all set to go! Conclude the transaction using the verified payment mode. Once done, you will receive a quick ping confirming the same. 

Invest in direct funds through a broker 

One of the ways to invest in direct mutual funds is through a broker.   

Choose a broker or a registrar to assist you in the process. The mutual fund program you want to invest in needs to adhere to the list, and the registrar or broker must have it in their brochure. 

If confused, you can invest in the Direct Mutual Fund Scheme through SEBI. It has multiple platforms for Registered Investment Advisors, and you can leverage these. 

Visit CAMS and KARVY, and view the investment opportunities on the portals.   

Check out the mutual fund’s utility option 

Mutual Funds Utility is your best option if you wish to invest and transact across multiple utilities. It is a shared platform of unique fund houses. 

You can begin investing in multiple funds just by creating an account. To invest in direct funds through MFU, CAN is mandatory. CAN (Common Account Number) helps check all the mutual fund portfolios and provides a consolidated view. You can create a CAN ID in 3 easy ways: 

STEP 1: Visit the official website of MFU India  

STEP 2: Select the CAN criteria 

STEP 3: Select the holding Type 

And you are good to go!  

These are some ways to invest in Direct Mutual Funds. You can choose from online and offline modes. Pick the best Direct Mutual funds scheme and invest carefully.

Consult an expert advisor to get the right plan for you 

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