Direct Mutual Fund Platform
Going direct online to buy Mutual Funds units based on the rating is on the rise. It has been shown by various research companies along with various Direct Mutual Fund platform companies that the long-term impact of the expense ratio. And how it can impact your returns in the long term.
If you surf Morning Star or Value Research to compare how direct mutual mutuals are performing you would be surprised to notice that all have one point better than the regular ones.
The main reason that they have better rating when compared to the regular funds is that of the lower expense ratio. Most of the rating agencies when they evaluate a fund they calculate risk to return ratio.
The difference in expense ratio often ranges between .75% to 2.00%. This difference might look very insignificant on the outlook but when taken into consideration risk to reward ratio along with long-term perspective things change drastically. The impact if this is so high that certain funds are able to achieve close to 2 points better ranking than traditional.
Gone are the days when you have to stand in the queue to get mutual funds allocated or a registered dealer doing all the necessary things that are required. Most of us getting advised by a Registered Investment Advisor. Certain investors now get only the financial planning report from the Registered Investment advisors report and manage the same on their own. Managing the investment has become a log easier.
Most of the AMC companies are offering online services and few of them are also offering app based investing services. Some of the newly listed companies are app only also.
List of Direct Mutual Fund Platform in India
All the major AMC are offering their services based on the direct platform system. Let’s us have a look at the list of direct mutual fund platform other than the maintained by AMC. The list goes as below.
- MF Utility
- Zerodha Coin
Now Basavaraj Tonagatti of www.basunivesh.com has done an amazing job by bringing together all the points of various new platform and their respective fees structure.
Explanation of the table as stated on the website is mentioned below.
- Platforms which are totally free of cost are highlighted with green. The platforms which offer at nominal and at competitive prices are highlighted in yellow.
- Above chart is prepared based on the prices showed on today. You have to refer the cost before jumping into investment.
Advantages of Direct Mutual Fund Platform
One of the main advantages is the cost it saves and rating which we have already stated below and not going to cover that again. Now there is something one should give importance to is the NAV. The NAV of the direct mutual fund is higher than that of the regular mutual fund.
With the popularity and rise in the number of people using mobile data services, mutual funds investment can be done from the mobile app for all your transactions. Professional advice is now your choice. And the first time investor and low bracket investors enjoy the opportunity to invest small amount without any charges at all.
Disadvantages of Direct Mutual Fund Platform
Earlier the Registered Investment Advisors were the once who used to advice as well as assist you in Investing also. But now since they do not get any benefit chances are that they might not advise you like the earlier way if you opt to buy from the direct mutual fund.
NAV is high is a good thing but for first-time investors, it is higher than the regular one. That might be a point of concern for few. People those who are not very much comfortable with the mobile app could find this a task in itself. Separate professional advice from RIA could now look very expensive.
If you are planning to invest high amount through mutual fund route there are chances that you might be paying a certain amount of changes and it is not completely free but yes you would be saving a lot in long term.
Many Direct mutual fund companies are promoting themselves about the saving’s over the long term.
Have a look at one such promotion from coin by Zerodha
Over to You
Direct Mutal Fund Investment is best for those who are willing to do their own research or get expert advice from Registered Investment Advisor and are okay to take up the entire process in their hand which is very easy.
However, if you are going to take efforts is building and investing in your own portfolio through mutual fund route you are losing a lot of money on the table.
If you are just giving way to reasons such at too time-consuming, complicated, and not getting to the importance of the benefits of mutual funds then you are just underrating the advantages it has over a long term.
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