Are you looking for online and cost-effective Best Direct Mutual Funds Platforms in India in 2018? There are many platforms with different features and pricing. Hence, let us discuss this which is best suitable for you.
What is a Direct Mutual Fund?
Direct Mutual Funds means investors buy directly from Mutual Fund Companies through their respective portals, MFU, CAMS or few online portals which offer such direct mutual funds online. Whereas regular mutual funds mean investors buy through middlemen (online or offline) like mutual fund advisers or brokers.
Due to no middlemen cost, such direct mutual funds offer you at lesser expenses than regular funds. The direct mutual fund has lower expense ratio than regular funds. Because of this, the NAV of a direct plan will be higher than the NAV of the regular plan.
Difference between Direct Mutual Funds and Regular Mutual Funds
# Expense Ratio
The Direct Mutual Funds expense ratio will be lesser than the Regular Mutual Funds. However, the difference varies based on the type of funds you choose and the particular fund.
Due to the absence of expense of middlemen, the NAV of direct and regular funds will be the difference. The NAV of Direct Mutual Funds will be higher than Regular Mutual Funds.
# Fund name
The fund name for regular funds will be like HDFC Top 200-Regular-Growth., However, for direct funds, the name will change as HDFC Top 200-Direct-Growth.
Also, you notice that in your account statement the ARN field will be mentioned as DIRECT.
Due to less expense ratio, the returns will definitely higher than the regular funds. Even though the difference is around 0.5% to 1%, if you compound it for long-term, then it creates a huge cap.
For example, let us say Rs.1 lakh investment in a Direct Plan and a Regular Plan over 40 yrs. Your investments will be worth 35% more in just 20 yrs when you invest in Direct Plans (Assumption a 12% Return on investments and a Total Expenses Ratio of 1.0% for Direct Plans and 2.5% for Regular Plans.) Look at below chart.
Do remember that in the case of both regular and direct mutual funds, the investment objective, asset allocation pattern, risk factors and the fund managers are same. But due to the difference in expense ratio, your possibility to earn more than regular will be sure.
Advantages of Direct Mutual Funds
Below are the few advantages of investing in Direct Mutual Funds.
# Expense Ratio
As I explained above, due to the absence of middlemen the expense ratio of direct mutual funds will be lower than regular plans.
Even though the difference is around 1% to 0.5%, but in long run, this may create the huge difference. For example, if we consider HDFC Top Fund-Growth, then the expense ratio of regular funds is 2.04%. Whereas the expense ratio of direct funds is 1.29%. The difference of 0.75%. Even though such difference may not look big. However, if you are a long-term investor, then each year’s such 0.75% will create a huge difference.
Do remember that the expense ratio between direct and regular will not be same for all types of schemes and for all funds. It depends on the category of the fund and depends on the particular mutual fund.
I explained you about the expense ratio difference between direct and regular of HDFC Top 200-G. However, if you look at debt funds, the difference is lesser than equity funds.
For example, HDFC Liquid Fund-G expense ratio for regular funds is 0.20% but for direct funds, it is 0.10%. The difference of 0.1%.
Hence, the expense ratio between direct and regular funds depends on the category of the fund and the particular fund.
# Control in your hand
Due to the absence of any middlemen, the control of investment is in your hand. If you are the DIY (Do-It-Yourself) investor or hiring a Fee-Only Planner, then opting such direct mutual funds will give you an edge.
You can manage your money as per your wish but for that, you must know what you are doing!!
Disadvantages of Direct Mutual Funds
# Service hurdles
As there are no middlemen involved, you have to take care of processing activity which involves like KYC formalities and all. If you opted for offline mode, then form filling and submitting to respective AMC is the headache of yours.
Along with this, in a later stage, you may need to change the bank, nominee or change in KYC. In such situations, it is you who has to take care of all these processes.
# May not suitable for all
If you are a DIY investor or hired a fee-only planner, then such direct funds will give you an edge over regular funds. However, you are the first time investor or don’t know about mutual funds, then the same investment may sometimes be hazardous.
Hence, knowing about yourself and the need choose between direct or regular.
Best Direct Mutual Funds Platforms in India to invest online
Now you understood the meaning of direct mutual funds and to whom such funds are suitable. Let us move on and find out the Best Direct Mutual Funds Platforms in India to invest online.
Currently, there are around 19 platforms through which you can invest in direct mutual funds. Choosing the best direct mutual fund platforms among them is not so easy but not so difficult also. However, considering the cost factor, I have shortlisted as below.
- Platforms which are totally free of cost are highlighted with green. The platforms which offers at nominal and at competative prices are highlighted in yellow.
- Above chart is prepared based on the prices showed as on today. You have to refer the cost before jumping into investment.
You notice that few platforms offer you the flat fee and few as % of AUM or per transaction basis. Hence, in my view, it is always best to opt for a flat fee than the fee based on % of AUM or per transaction basis.
I will now divide the Best Direct Mutual Funds Platforms in India to invest online into three categories.
# Category One-Through Mutual Fund Companies portals
It is easy and no headache of relying on anyone if you are already KYC complied. However, the only hurdle is to remember the login details of each company portals. This is completely FREE.
Generating report is not an issue as you will get the consolidated account statements from NSDL.
# Category Two-CAMS/Karvy and MF Utility
You can utilize the CAMS facility for the Mutual Fund Companies to which it is a service provider. For the others, you have to rely on mutual fund companies portals only. As of now, CAMS provides services to below mutual fund companies.
- HDFC Mutual Fund
- DSPBR Mutual Fund
- Birla Sunlife Mutual Fund
- HSBC Mutual Fund
- ICICI Prudential Mutual Fund
- IDFC Mutual Fund
- IIFL Mutual Fund
- Kotak Mutual Fund
- L&T Mutual Fund
- Mahindra Mutual Fund
- PPFAS Mutual Fund
- SBI Mutual Fund
- Shriram Mutual Fund
- Tata Mutual Fund
- Union Mutual Fund
Karvy also offers the direct fund platform. Using Ktrack app of Karvy, you can buy the direct mutual funds. Using Karvy platform, you can buy the below AMCs direct funds.
- Axis Mutual Fund
- Baroda Pioneer Mutual Fund
- BOI AXA Mutual Fund
- Canara Robeco Mutual Fund
- DHFL Pramerica Mutual Fund
- Edelweiss Mutual Fund
- IDBI Mutual Fund
- India Bulls Mutual Fund
- INVESCO Mutual Fund
- JM Financial Mutual Fund
- LIC Mutual Fund
- Mirae Asset Mutual Fund
- Motilal Oswal Mutual Fund
- Peerless Mutual Fund
- Principal Mutual Fund
- Quantum Mutual Fund
- Reliance Mutual Fund
- Taurus Mutual Fund
MF Utility is one more FREE platform which supports all AMCs (Except Mirae Asset AMC and Canara Robeco AMC). Hence, it is one of the best and cheapest online platform in my view.
# Category Three-Online Platforms from SEBI RIAs providing Robo Advisory
Remaining all falls under online platforms from SEBI RIAs who provides Robo Advisory or just provide you an online platform to invest in direct funds.
Here, few portals are dependent on MF Utility. They are Unovest, Oro Wealth, Piggy APP, Bharosa Club, Wealthtrust App and Wixifi. Rest of all portals provide you independent service without relying on MFU.
However, The winner in this category is Kuvera. But Moneyfront and Invezta look offering the competitive pricing.
Conclusion-So as per above data, which is the Best Direct Mutual Funds Platforms in India to invest online? Is it respective AMC portals, CAMS or MF Utility, which offers FEE or the others?
In my view, either stick to respective Mutual Fund Platforms, CAMS or MFU. However, if you are looking for robo advisory and portfolio management services, then opt for the other options.
Again in other options, choose the one which charges you flatly rather than the % of AUM. Initially, such % based charges may look cheaper. However, in long cost may grow.
From above table, apart from AMC portals, CAMS and MFU, Kuvera and Mymoneysage are the real winners. After that, Zerodha looks good when it comes to charges. However, the biggest drawback of zerodha is that you have to hold the units in demat account. This is the biggest hurdle of managing fee of demat account. Also, you no need to have demat account for investing in mutual funds as the units are already in electronic format.
Hence, use either respective AMC portals, CAMS (if you are investing in CAMS servicing MFs) or MF Utility is the best direct mutual fund platforms in India to invest online. However, if you are looking for Robo advisory and portfolio tracking facility, then opt for others who offer you flat fee than % of the AUM-based fee.
Final choices of Best Direct Mutual Funds Platforms in India to invest online are as below.
- Respective AMC portals
Refer our posts related to Mutual funds-
- Top 10 Best SIP Mutual Funds to invest in India in 2018
- Top 5 Best ELSS Tax Saving Mutual Funds to invest in 2017
- Top and Best Debt Mutual Funds in India for 2017
- Top 5 Best Liquid Mutual Funds in India in 2017