Since the introduction of mutual funds (MF) in India in 1963, the Indian Mutual Fund industry has evolved quite a lot as per the needs of the changing times. Increased awareness about investment practices among the general public and the launch of innovative investment schemes by mutual fund houses has helped attract many retail investors into this space.
Major innovations that led the growth in the Indian mutual fund industry was the introduction of “Systematic Investment Plan (SIP)” and “Direct Plan”. It resulted in the rush of small retail investors who wanted to take advantage of the growth of the market but due to the paucity of time, knowledge and bulk funds restricted them.
The introduction of “Direct Plan” in the mutual fund scheme in 2013 was a landmark development. It helped to attract the younger generation who basically are inclined towards the digital world and follow the Do it Yourself (DIY) approach. The main advantage of direct plans is a lower Total Expense Ratio, (for equity MF, the difference is greater than 1%) which translates to higher returns of 2 -3% compared to Regular Funds over a longer period. For the first time, it gave investors the sense of freedom from brokers and agents.
Further advancements in the FinTech space have also helped the mutual fund industry to grow manifold. It marked the change in the mutual fund distribution business, which was dominated by offline brokers and agents. For the first time through the use of technology, personalized investment recommendations were provided, performances were tracked and portfolios were created, which did away with the human biases which resulted in fewer deviations in portfolio performance.
In this article, we will look at the advantages of direct mutual funds platform and why they offer a great value:
- All Fund Houses Under One Roof
Direct mutual fund platforms like Oro have listed all the mutual fund houses operating in India in their respective platforms, which allows you to open multiple folios with different MF houses on a single platform. It eliminates the need to create a web profile with different fund houses, which later becomes a bit tedious and difficult to operate and keep track of.
A single platform helps you to manage all your investments across different fund houses efficiently.
- Portfolio Creation into Different Categories as per Your Goals
Building a right portfolio of investment funds to meet your financial goals is the most important function. With the help of the insight of an experienced financial adviser, you can create a portfolio aligned with your future goals.
Selecting the right investment fund is very necessary as a slight deviation in performance can derail your whole investment objective.
- Fund Insights, Portfolio Review and Period Report
The financial world is constantly evolving and at times, you can miss details or interpret something wrong which can adversely affect your portfolio.
The tools and detailed reports offered by direct mutual fund platforms help you review your investment portfolio easily without missing any piece of information after which you can act based on the recommendation given.
- Investment Advisory
Investors with less knowledge about the market and different fund categories always run the risk of choosing the wrong product or are not able to decide which one to choose.
Expert unbiased investment pieces of advice by direct mutual fund platforms over email, phone, and chat help you with personalised investment recommendations according to your future goal.
- Flexible Investment Options
Flexible Investment Options is a feature, which is not offered by any fund house even at their online portal. Enforcing any change in the SIP amount is bit complex, as you need to issue a new standing instruction to the bank for amount debit before changes are made.
This feature helps you to step-up, lower, pause, stop or change your SIP investment amount with just a few clicks according to your needs. Although, it is not advised to stop, pause or lower the SIP amount as it will influence your investment goal, this feature can come in handy in times of emergency.
- Easy Steps to Documentation Related KYC and Investments
Unlike in the online portals of mutual fund houses where you need to complete the documentation process related to KYC and investments without any assistance, the direct mutual fund platforms assist you throughout the full documentation process till it is verified.
- Less Expensive over Regular Fund Types
Direct mutual fund platforms are less expensive compared to regular fund platforms. Platforms like Oro charge a one-time annual fee to get all the benefits.
When compared to commissions charged by regular fund types, it is far lesser and also you get the benefits of multiple folios in single account such as portfolio review, recommendations, chat with experts, support etc. which is not offered by any regular fund platform or even at the web portal of mutual fund houses.
Even though the direct plans offered on the web portal of mutual fund houses are offered at zero costs, buying from a direct mutual fund platform provides its investors with a host of benefits through its robust IT systems which help in effective monitoring of funds and is way cheaper than regular fund types.