How to invest in direct plans of mutual funds online?

How to invest in direct mutual funds onlineHow to invest in direct mutual funds online?

Investment in mutual funds can be done directly from mutual fund houses. However since these are direct mutual funds, you cannot invest through your regular broker. There is a different process to do this. Mr.Chetan Agarwal Raj (Retired) has requested me to detail the process on how to invest in direct mutual funds online.

What are Direct Mutual funds?

You might be aware that all mutual fund houses have been showing mutual fund schemes with added word “Direct”. Means these can be purchased directly by investors without going through mutual fund brokers or agents. Mutual fund brokers would get trial fees from mutual fund houses and mutual fund returns would get reduced to that extent. The trial fees would range between 0.25% to 2% per annum. To this extent, you can enhance your mutual fund returns per annum if you wish to invest in direct mutual funds online. Know the process before you invest in direct mutual funds.

Also read: Mutual funds Direct Plans Vs Regular Plans

How to invest in direct mutual funds online?

You should know few things before you start this process. You can purchase mutual funds or invest in mutual funds through SIP. Also you might be a first time investor or existing investor for a mutual fund house. These 4 parameters needs to be kept in mind as the process would differ.

a) Purchase of direct mutual funds online – First time investors

Step-1: Know in which mutual fund you want to invest.

Step-2: Visit the mutual fund house website (e.g. hdfcfund or iciciprufund.com)

Step-3: Choose the option “Invest online”

Step-4: Download the mutual fund investment application form

Step-5: Fill the personal and investment details

Step-6: Enclose cheque or DD for the amount you want to invest

Step-7: Enclosed KYC (Know your customer) acknowledgement document. If you have not submitted KYC document earlier, then

Download the KYC form

Enclose proof of identify, proof of address, PAN card and 2 passport photographs

Step-8: Send the all the relevant documents to mutual fund customer care address specified on application form.

Step-9: Mutual fund customer care would review and process your application form and would send you mutual fund receipt after allotment of mutual fund units. Now you have become the existing customer for the mutual fund house. After this, you would be able to invest in direct mutual funds online.

b) SIP of direct mutual funds online – First time investors

Step-1: Know in which mutual fund you want to invest.

Step-2: Visit the mutual fund house website (e.g. hdfcfund or iciciprufund.com)

Step-3: Choose the option “Invest online”

Step-4: Select the payment option (Auto debit-ECS/ standing instructions / post dated cheques

Step-5: Fill the online application form

Step-6: The filled-in application form would be emailed to your email address

Step-7: Print the form and sign the copy

Step-8: Send the relevant documents with payment details to mutual fund house customer care centre.

Step-9: Mutual fund customer care would review and process your application form and would send you mutual fund receipt after allotment of mutual fund units. Now you have become the existing customer for the mutual fund house all future transactions can be done online.

c) Purchase / SIP of direct mutual funds online – existing investors

Step-1: Know in which mutual fund you want to invest.

Step-2: Visit the mutual fund house website (e.g. HDFCfund or ICICIPrufund.com)

Step-3: Choose the option “Invest online”

Step-4: Select the mutual fund option “Purchase” or “SIP”

Step-5: Select the payment options: Auto Debit-ECS / Standing instructions / DD / Cheque

Step-6: Select “Existing customer”

Step-7: Fill in the application form. The main field’s description / jargons are given later in this article.

Step-8: Enter your payment details

Step-9: Review and submit your application.

Step-10: Mutual fund customer care would review and process your application form and would send you mutual fund receipt after allotment of mutual fund units.

Also read: How mutual fund returns are taxed?

Important point to remember while filling the application form

1) Folio number: If you are existing customer for the mutual fund house, you need to enter the existing mutual fund folio no. The folio number would be available on the mutual fund statement sent to you earlier.

2) Broker: You should enter only “DIRECT”. In such case your investment would be in direct plans. If you enter “Broker”, it would take you to regular mutual fund plans. You need to be little careful while filling the field.

3) Broker Code and Sub broker code: Both fields should be “DIRECT”

4) Scheme type: The options available are Equity funds, Debt funds, balanced/hybrid funds, ETF’s etc., Choose appropriate scheme type.

5) Scheme option: Dividend re-invst (Growth option) or dividend payment  (Dividend option). If you want to grow your money and do not want any payment interim, choose Dividend re-investment option.

7) Scheme Name: Choose the scheme name which you want to invest.

8) Payment details: Fill in appropriate payment details. If you are investing through SIP, you need to be little careful while filling the application form.

When you select the mutual fund scheme for SIP, it would indicate the minimum application form. Means this is the minimum amount you need to invest per month. You cannot invest less than this and your application would get rejected if you fill less than this.

Enter the bank name, bank address, bank MICR code, account number details correctly so that your ECS/Standing instructions would go as per this.

SIP period needs to be selected “from date” to “To date”. This is the period of SIP you want to invest. Generally mutual fund schemes needs to be invested for minimum of 6 months period if you go for smaller amounts.

The process detailed above, are taken from some of the mutual fund house websites. However there might be small change in this process across other mutual funds companies.

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Suresh
How to invest in direct mutual funds online

18 comments

  • tejas patel

    sir if i purchase online d plane and after any time i want to watch my money progress than i able to see or not ?

  • Suman Saha

    sir,
    i hv 5 mutual fund plans regular but i want to change those to direct plan,please let u know the procedure

  • amar

    Dear Suresh,
    Do brokers get commission every year or for 1st Year for mutual fund via SIP. How Can one convert mutual fund taken through broker into direct.

    • MF brokers would get 0.2% to 1.5% commission per year on the amount you invest through them. You cannot convert regular plans to direct. You need to close and buy through direct plans.

  • Rajesh Kumar

    Hi Suresh,
    I have selected following Funds towards my investment span of 8-15 years. I have tried to balance my allocation through 5K SIP/month in each funds. Please comment if I am chosing the right one…thanks.

    Birla Sun Life Top 100 Fund
    ICICI Predential Focused Bluechip Equity Fund
    Franklin High Growth Cos.
    Birla Sun Life MNC Fund
    ICICI Predential Value Discovery Fund
    Can Robeko Emerging Equities Fund
    HDFC Mid-Cap Opp. Fund
    HDFC Balanced Fund

  • amar

    As i have invested through some broker in SIP, Should broker has to give me any receipt. As i have ask him. he said you got statement in your mail and  I am getting statement through mail in my name, address & folio number. But at time of withdrawal, do you think detail given in statement is enough to withdraw. 

    • Amar, If the MF units are in your name, it is nothing to do with broker. Generally brokers would get trial fees when they enroll you to mutual fund scheme. The relationship ends there. They would automatically gets such fees from mutual fund scheme and there would not be any transaction between you and broker.

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