frame

Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

Sign In Register

Regular vs direct mutual funds

If direct mutual funds can save as much as 0.5-1.5%, why regular mutual fund exists? What are the benefits of investing in regular funds compared to direct mutual funds?

Tagged:

Comments

  • edited March 9

    First of all, the direct plan came into existence only after regular plans and hence they are still in popularity. There are a couple of reasons why people still invest in regular plans.

    For example, if you choose direct plans, managing different funds may be little tedious job for you because if you want to buy different schemes of different MFs, you have to visit each one’s website to buy their direct plans. Managing regular fund portfolio is comparatively easier with a broker. Next, you can get advice from your broker if you invest in regular funds through them. And finally, regular plans are still way easier to get started for the beginners.

    Also read: How to invest in Direct Mutual Funds?

    Anyways, it's true that direct funds can save up to 0.5-1.5% and if you are ready to put some efforts, go for the direct plans. I hope it helps.

  • Hi Kritesh...thank you so much for the answer. I want to know how can I invest in direct mutual fund and is there any app which i can use?

  • @kritika said:
    Hi Kritesh...thank you so much for the answer. I want to know how can I invest in direct mutual fund and is there any app which i can use?

    You are welcome. A few apps like Paytm Money, Groww, Coin, Piggy, Sqrrl, Kuvera etc offers direct mutual fund investment option. You can download these apps on play store.

  • edited March 9

    @Kritesh_Abhishek said:
    You are welcome. A few apps like Paytm Money, Groww, Coin, Piggy, Sqrrl, Kuvera etc offers direct mutual fund investment option. You can download these apps on play store.

    Thank you...which one is the best?

  • Regular mutual funds are offered by distributors of Mutual Fund who thus get a commission from the AMC though Direct Mutual Fund are purchased straightforwardly by the Investors thus avoiding any interaction/intervention of a Mutual Fund merchant. Since in direct mutual funds, AMC's don't have to pay commission to anyone. this benefit of lower cost is passed onto Investors who get a similar MF with lower cost.

    In fact, all AMC’s maintain two different rates for the same mutual fund scheme for regular and direct investors.

  • Every mutual fund offers a direct plan and regular plan to investors. Both the plans are identical, but the major difference is returns offered by them. Mutual fund advisors have taken a subscription from several mutual fund (MF) companies such as HDFC mutual fund, SBI mutual fund, etc. They also force you to buy mutual funds from them so that they can earn a subscription from the MF companies. They suggest you to opt for SIP vs lump sum so that they can earn a commission, ranging from .2% to .5% depending upon the mutual fund company. These advisors also earn a commission on every SIP paid by you. However, SEBI has recently launched a series of reforms to bring transparency in mutual fund and the advisory business. Some of the advisors recommend those mutual funds from which they get a higher commission from mutual fund companies, regardless of your need and risk appetite. This can be dangerous, especially if you near to your retirement age and should invest in debt mutual funds or opt for assets having guaranteed returns with minimal risk. It also leads to jeopardizing your portfolio. Many advisors also charge a commission for financial planning besides taking a commission on the recommended products as they earn on every SIP you pay for.

    The commissions are only deducted from every SIP paid by you. However, SEBI has tried to address the commission disclosure, but it has not helped to clean the air. There are also several platforms offering mutual funds such as Zerodha, Upwardly, Scripbox, etc., but these platforms also charge a one-time commission or offer regular plans while earning a huge commission on every SIP. Let us look why direct mutual fund plan is better than regular plans offered by these advisors: https://bit.ly/2JvRR6q

Sign In or Register to comment.

Trade Brains | Discussion Forum

| Learn to Invest in Stocks
Copyright @ 2019 |Trade brains is a financial education blog focused to teach stock market investing and personal finance to the DIY (do-it-yourself) investors in order to make, grow & sometimes even spend money. #HappyInvesting
Powered by Dailyraven Technologies

Contact us

info@tradebrains.in
contact@tradebrains.in
(+91) 8297411244

Get In Touch