How to Invest in Direct Mutual Funds?
In today is a world of financial markets, investing is not just about making money. It is also about building wealth, helping people who are in need, and saving for the future. However, not everyone has the time or the money to invest. That is where direct mutual funds come in. With a direct mutual fund, you get the benefits of investing without any middleman. This means you can save on fees, better investment options, and access to a wider range of investment options. In this article, we will talk about the different types of direct mutual funds and how you can invest in them.
What Are Direct Mutual Funds?
Direct plans are offered by several companies. Some of them have their own brand names. For instance, ICICI Prudential Mutual Fund Limited offers ICICI Direct Mutual Funds. Similarly, HDFC Direct is a mutual fund scheme offered by HDFC Mutual Fund Ltd.
Direct plans provide two types of investments - equity and debt. In a direct equity fund, the scheme invests only in equities. It does not offer any money market fund or money market instruments. Similarly, in a direct debt fund, the scheme invests only in debt instruments. It does not invest in equities.
In direct funds, the investors can buy units of mutual funds from the AMC or directly from the scheme. A unit means one share of the fund. In the case of mutual funds with a lock-in period, the investors can buy units of the same fund after the expiry of the lock-in period. Units can be bought in the form of a Demat account or physical stock certificate. The AMC issues an investment receipt to the investor which is equivalent to a physical stock certificate.
Direct Mutual Funds are a subset of mutual fund schemes that have no agent/distributor. This means that the investments are made directly from the investor to the mutual fund scheme.
There are different types of direct plans, depending on the kind of schemes you want to invest in. These are:
1. Direct Plans of Equity-oriented Mutual Funds – The most common type of direct plan is for equities. In this case, the investor buys shares directly from the mutual fund company and has the right to sell them. The investor receives a certificate of allotment (COA) that shows the details of the purchased units. The investor can also redeem the shares by paying the price shown in the COA.
2. Direct Plans of Debt-oriented Mutual Funds – In this case, the investor buys bonds directly from the mutual fund company and has the right to sell them. The investor receives a certificate of allotment (COA) that shows the details of the purchased units. The investor can also redeem the bonds by paying the price shown in the COA.
3. Direct Plans of Balanced Mutual Funds – This plan is for investors who want to invest in equities and debt-oriented mutual funds. The investor buys units from both types of mutual funds and has the right to redeem them at any time. The investor gets a certificate of allotment (COA) which shows the details of the purchased units. The investor can also redeem the units by
How To Invest In Direct Mutual Funds?
Mutual funds are open-ended investments that are pooled together by many small investors. Mutual funds are offered by mutual fund houses as a way for you to invest money. They are a good way for individuals to start investing and save money for the future. In addition, they allow you to invest in stocks, bonds, and other securities with the help of an advisor.
There are many different types of mutual funds. Each has a different investment objective and can be accessed in various ways. Some of these include direct investment, SIP (systematic investment plan), and fund of funds.
Direct investment is a method of investing where you go to an individual or company and make an investment directly. You can choose from a variety of funds, such as equity, debt, or hybrid funds.
SIP is a method of investing where you contribute money to an investment company on a regular basis, such as monthly. The investment company invests your money and returns it to you periodically, usually every month.
A fund of funds is a collection of other funds. You can choose a fund of funds based on its investment objectives, asset allocation, and risk profile. These funds are usually cheaper than buying individual funds.
Mutual funds are easy to understand. In addition, they are inexpensive, tax-efficient, and can be easily managed by a financial advisor.
How To Invest In Direct Mutual Funds in India?
The AMC was created in 1985 as a single-window regulator. The AMC has the responsibility of marketing, selling, and servicing mutual funds in India. The AMC is the first choice for all investors to invest in mutual funds. AMC is a statutory body registered under the Securities Contract (Regulation) Act 1956 and the Companies Act 1956. It is regulated by the Securities and Exchange Board of India.
Mutual Funds are professionally managed investment vehicles. They provide an efficient way for investors to invest their money for long-term returns. Mutual fund companies collect capital from investors, pool it together, and invest in securities or other assets.
AMCs offer a wide variety of funds to choose from. If you are looking for a conservative fund that offers consistent returns, then you can invest in debt funds. These funds invest in bonds or loans issued by the government, corporate sector, banks, or financial institutions. If you want to invest in equity funds, then you can choose from many options such as domestic or foreign, large-cap or small-cap, growth or value. You can also invest in hybrid funds which invest in both debt and equity.
You could invest in a Direct Plan online through the websites of the respective mutual funds or via online platforms of stock exchanges platform or Mutual Funds Utility (MFU) or other various digital channels.
There are also a few online portals that offer a facility to invest in Direct Plans. However, such online portals are run by private firms that offer Robo-advisory financial planning services, usually for a fee – which could be per year or per transaction.
Please also note that not all online portals offer Direct Plans, even though one may invest in mutual fund schemes on such portals.
Many banks offer an option to invest in MF schemes on their Internet banking portal. Financial intermediaries, including banks, are mutual fund distributors, and hence do not / cannot offer you Direct Plans on their web portals.
You may also invest in Direct Plan using a physical application form, which can be submitted at the investor service center/branch of the concerned mutual fund or its registrar and transfer agent (RTA) along with the cheque or demand draft.
While filling up a mutual fund application form – whether online via the website of a mutual fund or in physical mode, please ensure that you tick/select the Direct Plan box. If you are choosing the physical mode, it is advisable to strike out the box for distributor code on the top of the application form or write the word “Direct” in the box.