Mutual funds investment can be started in two ways for same fund, Regular and Direct mutual funds . Regular and Direct plans are just the two options of the same mutual fund scheme, run by the same fund managers who invest in the same stocks and bonds. The only difference between the two is that in case of a regular plan your AMC or mutual fund house does pay a commission to your broker as distribution expenses or transaction fee out of your investment, whereas in case of a direct plan, no such commission is paid. Instead, in case of direct plans the commission is added to your investment balance, thereby reducing the expense ratio of your mutual fund scheme and increasing your return over the long-term.
Below take an example of same fund Quantum Long Term Equity Value Fund in direct vs regular expense ratio.
Quantum Long Term Equity Value Fund(Regular) – Expense Ratio 1.46 %
Quantum Long Term Equity Value Fund(Direct) – Expense Ratio 1.29 %
In short, Always select Direct mutual funds.
How to Start Regular Mutual Funds:
Regular Mutual Funds can be availed by broker portals such as wealthtrust, ClearTax, FundsIndia. The brokerage portals would add transaction fees and distribution expenses on your investment. It would increase the fund expenses and reduce the return at the end. Restrain from regular mutual funds.
How to Start Direct Mutual funds:
Direct mutual funds can be started from AMC portal or direct plan mutual funds aggregator platforms.
AMC Portals:
Direct mutual funds can be availed by Mutual funds portals of respective AMC such as ICICI Mutual Funds, HDFC mutual funds, SBI mutual Funds and DSP blackrock. Th e disadvantage of the AMC portal is we can only invest in mutual funds offered by the AMC. If we want to invest in multiple different mutual funds, we have to create account in each AMC. It is unnecessary overhead for the investor. If you want to invest mutual funds from 3 different AMC’s, we have to open account in 3 different portals. It is hard to manage and monitor.
To invest in ICICI Prudential Large & Mid Cap Fund => Open account in ICICI mutual fund portal.
To Invest in Aditya Birla Sun Life Equity Savings Fund => Open account in aditya birla myuniverse mutual fund portal.
To invest in SBI Bluechip Fund => open account in SBI mutual fund portal.
3 Different account to manage 3 mutual funds:(
Mutual Fund aggregator Platforms:
Mutual funds aggregator platform is one stop solution for mutual funds investment. We can open account in one of aggregator and invest in all the mutual fund from all the AMC in single account. It is easy to manage and track the mutual funds investment. Regular plan calculates commission from invested amount. For example, if we invest 1 lakh rupees and the commission is 1%, it would be charged 1000 rupees. But the direct plan aggregator helps us to buy direct mutual fund and charge very less fees or free to manage the funds.Here are the 6 best & free direct online mutual fund platforms to start your mutual fund investment.
PaisaBazaar : Online platform is 100% free
Kuvera : Online platform is 100% free
Zerodha Coin : Charge INR 50 per month once the investment value in your direct mutual fund portfolio crosses INR 25,000
PayTM Money : 100% free and currently offers support for 25+ AMCs, constituting more than 90% of industry AUM
Groww : 100% free for mutual fund investment.
ClearFunds : 100 % free mutual fund aggregator platform.
To invest in mutual funds from any AMC, just open one account in any one of the aggregator and start invest on respective mutual funds.
One account to manage all the mutual funds. Simple and easy.
This post, we discussed on different between direct and regular mutual funds. Advantage of selecting direct mutual fund over regular mutual funds. Always select direct mutual funds to get better returns. Open account in mutual fund aggregator platform, to manage the funds in one portal. Happy Investing:)