How To Buy Direct Mutual Funds Online In India? A Simple Guide

Mutual funds have become one of the most popular ways to invest money and grow wealth over time. Many people prefer mutual funds because they are managed by experts and are easy to access. If you are new to mutual funds, you may have heard of something called as Regular Mutual Fund and direct mutual fund.

The difference between a direct mutual fund and a regular one is simple. A regular mutual fund involves a distributor or financial advisor who helps you buy the fund but also charges a commission. This commission is included in the fund's expenses. A direct mutual fund skips the middleman, so the cost is lower, and your investment can grow a little faster in the long run.

What Is Direct Mutual Fund?

Direct mutual funds are a type of mutual fund that you can buy directly from the mutual fund company (also known as the AMC or Asset Management Company) or through a few approved online platforms. These funds do not involve any broker or agent. That means you do not pay any commission or extra fees. As a result, you get slightly better returns compared to regular mutual funds over time.

"Direct Plan has lower expense ratio than the Regular Plan, as there is no distributor/agent involved, and hence there is saving in terms of distribution cost/commissions paid out to the distributor/agent, which is added back to the returns of the scheme. Hence, a Direct Plan has a separate NAV (Net Asset Value), which is higher than the "Regular" Plan's NAV," mentioned AMFI (Association Of Mutual Funds In India).

How To Buy Direct Mutual Funds Online In India?

"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 channel," says AMFI.

There are several ways to invest in direct mutual funds online. But, first, you have to complete your KYC (Know Your Customer) process. This step is required for all investors in India and can be done online using your PAN card and Aadhaar number. Most platforms help you do this when you create an account.

Here are the 3 major ways to invest online in direct Mutual Funds.

AMC website:

Visit the official website of the AMC. There, you can register yourself, complete KYC if needed, and start investing.

Investing through the AMC website means you deal directly with the fund house, which ensures high security and zero commission. However, it only allows you to invest in that one AMC's funds.

Direct Investment Platforms / Apps:

Another easy option is to use popular investment apps and platforms like Groww, Kuvera, Paytm Money, Zerodha Coin, ET Money, and INDmoney. The steps would be similar to buying through AMC website.

These apps allow you to buy direct mutual funds with zero commission. You can track your investments, set SIPs, switch from regular to direct plans, and manage your portfolio all in one place.

Many of these apps also offer helpful tools like SIP calculators, goal tracking features, and portfolio analysis.

Mutual Fund Utilities:

You can also invest through Mutual Fund Utilities (MFU), a platform created by fund houses to allow investors to invest in multiple AMCs through one account. For this, you will need to create a Common Account Number (CAN).

Steps For Investing In Direct Mutual Funds:

1. After choosing the platform, you need to select the mutual fund you want to invest in. Make sure you pick the Direct Plan, not the regular one. You also have to choose between the Growth option (where your returns are reinvested and grow over time) and the Dividend option (where you receive payouts regularly).

2. Next, you need to decide how much to invest. You can choose a lump sum amount or start a monthly SIP, which helps you invest regularly and reduce market risk over time.

3. Then make the payment using UPI, net banking, or debit card, your investment will be processed, and you'll receive a confirmation.

4. You can track your investments on the app or website, or even request a Consolidated Account Statement (CAS) through CAMS or KFintech, which gives you a full view of your mutual fund holdings.

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