Direct Mutual Fund Plans : Details & Benefits

Mutual Funds are the best tools for long term wealth creation. Investors in Mutual funds get the twin benefits of diversification and also management of their funds through professionals.

SEBI introduced reforms in the mutual fund sector in 2013. Thanks to these reforms, Direct Mutual Fund schemes are gaining popularity not only with just corporate or high net worth individuals but also with the retail investors.

What are Direct Mutual Fund Schemes?

Although the Asset Management Companies (AMC) allowed this much before the year 2011, direct investment in mutual funds has become famous only recently. Direct mutual funds plans are those where AMC / mutual fund Houses do not charge distributor expenses / trail fees / transaction charges. ‘Direct’ means no intermediaries.

Direct mutual fund schemes have lower Expense Ratio than that of Regular plans. This is the main reason why the NAV of a direct plan will be higher than the NAV of a regular plan of the same scheme.

Direct Mutual Fund Plan Vs Regular Mutual Fund Plan

Let us now understand the differences between Regular and Direct Plans in Mutual Funds with an example;

Direct mutual fund schemes example

In the above example, we can observe that HDFC Balanced fund has four options, 2 regular schemes and 2 direct schemes. Kindly note that ‘D’ means ‘Dividend Plan’ and it does not mean ‘Direct Plan’. (G stands for Growth option.)

  • Expense Ratio : The Direct plans have lower expense ratio than Regular plans. The expense ratio of HDFC Balanced fund – Regular plan is 2.07% (as on Mar 2015) . Whereas, the expense ratio of HDFC Balanced fund – Direct Plan is 1.20%.
  • NAV : The Net Asset Values of Regular and Direct plans of the same scheme differ. The NAV of Direct Plan will be higher than the NAV of a Regular plan. The NAV of HDFC Balanced fund – Regular plan is Rs 109.85 whereas the NAV of HDFC Balanced fund – Direct Plan is Rs 111.97. 

 Regular mutual fund scheme NAV

Direct mutual fund plan NAV

  • Returns : The difference in returns generated by a Regular plan and a Direct plan of a scheme is expected to range between 0.50 and 1 percent. This difference will compound year on year. The last two year CAGR (Compounded Annual Growth Rate) of HDFC Balanced fund – Direct fund (monthly SIP) is 22%. Whereas, HDFC Balanced fund – Regular plan has given return of around 20.97% during the same period.

In the case of both regular and direct mutual funds, the investment objective, asset allocation pattern, risk factors and the investment mix are same. A scheme’s portfolio will be the same for both, Regular plan and Direct Plan.

How to invest in Direct Mutual Fund Plans?

  • You can buy Direct plans online by visiting respective mutual fund house websites. For example, below screenshot has been taken from Reliance Mutual Fund’s website. When you are making an online investment, you can find two options ie ‘direct’ and ‘through distributor’. Select ‘Direct’ if you would like to invest in Direct plan of a scheme.Regular Vs direct mutual fund schemes invest online in direct plans
  • You can also invest in direct mutual fund schemes through MF Utility.
  • If you are investing in MFs offline (physically) then you just need to mention or tick the option ‘Direct plan’ in Mutual Fund Investment form. After this, even if the agent or the distributor of the scheme puts his/her ARN code, they will not get any commissions from the investment.
  • If you do not find ‘Direct plan’ option in application form, you can mention ‘DIRECT’ in the ARN column. Even if the agent code is missing in the ARN column, it will become a direct plan by default.(ARN means AMFI Registration Number. ARN is the unique code which is used to identify the MF agent / advisor.)

(KYC compliance is mandatory to invest in mutual funds. If your PAN is not KYC compliant, you may get eKYC done now. eKYC is a new online facility offered by some of the AMCs.) 

How to switch from regular to direct mutual fund plans? (for existing MF investors)

If you are an existing investor of a regular mutual fund scheme, and would like to convert your mutual fund from regular to direct plans, then you have to opt for a ‘Switch’.

In order to convert an existing regular fund to a direct fund, you need to submit ‘switch request’ to the concerned Asset Management Company (fund house). Based on your written switch request, the units under Regular plan will then be converted as Direct plan units.

For example : You can download and submit forms like ICICI MF’s Regular to Direct Switch Form & HDFC MF’s Regular to Direct Switch Form format.

Regular to Direct – Switch –  Exit Loads & Tax Implications 

If you are switching from Regular scheme to Direct scheme, this is considered as normal redemption (exit) only. Such transfer shall be considered as a Redemption (from regular plan) and a fresh investment (into direct plan). So ‘Exit Loads’ (if any) will be applicable. However if you have invested in Regular fund without mentioning any distributor code then ‘exit load’ is not applicable.

Since the ‘switch’ is considered as normal redemption request (exit), you have to be aware of the tax implications. Based on whether the capital gains are short term or long-term, respective taxation rules are applicable. Kindly read my article on MF capital gains taxation rules for more information.

Also, TDS is applicable on the ‘switch requests’ submitted by NRIs.

Important points & my Opinion on Direct Mutual Funds

Below are some of the important points on Direct Mutual Funds;

  • Kindly note that all types of mutual funds can be switched except Exchange Traded Funds.
  • For ELSS or any mutual fund schemes that have a lock-in period, you are eligible to move to Direct Plans once units complete their lock-in period. Your investments into direct plans will have a fresh lock-in of 3 years.
  • Kindly note that investing through ‘ICICI Direct’ or any online distribution platform does not mean you are investing in Direct plans of mutual funds.
  • Note that buying from a Bank, such as HDFC Bank, means you are using a distributor. Even if you buy an HDFC Mutual Fund, HDFC Bank acts as a distributor. The only way to buy “Direct” is to have “Direct” in the fund scheme name. If the scheme doesn’t say “Direct” in your statement report, you are paying commissions.
  • Difference in Investment returns generated between Regular and Direct plans is the highest in Equity oriented Schemes. In debt funds, the expense ratio of the regular plans is not too high hence the difference in returns is lower.
  • Direct plans of equity funds are not rated / ranked by the Rating agencies as they have not completed three years.
  • Fund houses like HDFC, ICICI Prudential, Reliance, Birla Sun Life and Franklin Templeton have over 20% of equity assets in direct plans coming from retail investors.

The investment return generated by a Direct mutual fund scheme can be say 1% higher than the returns offered by a Regular plan. Even a difference of this 1 percentage point can balloon into a huge gap due to compounding in the long term.

For example : If you invest Rs 1 Lac in a Regular plan which generates say 14% return in 15 years, the accumulation amount can be Rs 7.13 Lakh. The same Rs 1 Lac if you choose to invest in a Direct plan which generates say 15% return in 15 years, the accumulation amount can be Rs 8.13 Lakh. This extra 1 percent difference in the return can create a big impact in the final accumulated value over a long period.Direct plans of mutual funds low cost higher returns pic

If you invest in Direct mutual fund plans through multiple fund house websites, tracking your MF portfolio can be a bit challenging task. In this scenario, you can create dummy portfolio on web portals like Economic times or and can track your portfolio online. One more option is to invest in Direct plans offered by various fund houses through common platform like Mutual Fund Utility.

Though Direct Mutual Fund plans give higher returns, they are meant for investors who know which funds to buy. If you are not comfortable or do not have the expertise to identify good funds as per your financial goals, it is better to take the services of a Mutual Fund agent. You may also consider taking the help of a fee-only Financial planner to buy direct plans.

In the race to get higher returns, it could be disastrous if you invest in a wrong Direct mutual fund product and make 10% lower returns than its fund category. Instead  you can invest in a suitable Regular plan through an advisor who can guide you. A Direct Plan will work well if you have the required knowledge and infrastructure.

(You may read my article : Best & Top Equity Mutual Funds‘.)

I believe if you are making fresh mutual fund investments or creating new SIPs, you can surely consider investing in Direct mutual funds provided you know which funds to buy. While the process may look little complicated in the initial stages, it should be easy while investing in subsequent schemes.

For the existing investments, be aware of the exit loads, tax implications and applicability of lock-in period (if any) before you switch from Regular plans to Direct mutual fund plans.

Do you invest in Direct plans of Mutual funds? Kindly share your views and comments.

Continue reading :

(Image courtesy of Stuart Miles at (References : Moneycontrol, Valueresearchonline & Economic Times.)

  • Mandar says:

    Hi Sreekanth,

    I have SIP for Tata Hybrid Equity Fund – Regular plan – Growth.
    I have been investing in it through SIP for last 3 years. But the returns are not good at all. Please suggest where should I switch by stopping the SIP in this plan

  • Amar Aware says:

    Hi, I am first time investor. Interested in tax saving MF direct plans. Can I use MyCAMS app? Will they charge me for this service.
    Or any other alternatives

    • Sreekanth Reddy says:

      Dear Amar,
      You can opt for MyCAMS. MyCams allows you to invest in both – Regular & Direct Plans. So choose based on your preference.
      You may also check out MF industry sponsored platform MFUTILITY as well.

  • Rajeev says:

    Hi i have invested in following MF since 2017 through a distributor
    Now i want to invest DIRECTLY, what are the issues involved and how to go about it.

  • raj_udai says:

    Hi Sreekanth,

    I am a first time investor and want to start the SIP for SBI blue chip direct plan through MyCams .

    1)Does myCams platform allows to invest in SIP for this fund ? Because when I selected this fund this asked me to invest Rs 5000 which is the minimum investment. This is because it is MF and not SIP. Can you guide me how to start SIP through myCams.

    • Dear Raj,
      Yes, you can invest in this fund through myCams.
      The minimum first investment for this fund is Rs 5,000 (as per fund house) and then you can set up SIP (make additional investments) with a minimum amount of Rs 1,000.

  • Asha Kanta Sharma says:

    An Excellent Article Indeed…

    Learned a lot…..Thanks

  • Angelo Barboza says:

    Thanks Sreekanth for this information.

  • Robin Singh says:

    Dear Sree

    I want your help here. I have two questions.

    I already have a portfolio which is mix of regular and direct NAV with lumpsum investments. However I have four SIPs in direct NAV. All of these were purchased in the offline mode. I was maintain the portfolio in a excel file but that was tedious process. I have registered on the CAMS website and now I get statement once a month which is generally incorrect. If I book profits they show it as complete redemption. So I can’t rely on their statement anymore. I want to maintain an online portfolio where I can manage the existing investments in DIRECT nav and add more in DIRECT nav.
    2. Can you suggest any names. I am told scripbox, investza, fundsindia etc but I don’t their reliability as a distributor. Plus since I have spent some time in the field I am actually not looking for advise, but only the platform to buy and sell. Platforms like ICICI Direct offer great services but only to buy regular mutual funds.

    Waiting for your reply


  • Prabhu Sundararaman says:

    Hello Sreekanth,
    Thanks for your wonderful post. It has confirmed my understanding that Direct Plans for MF are better than Regular Plans and it is worth switching to direct plans if you are knowledgeable enough to select your funds.
    I still have some queries and I would be happy if you can clarify them.

    I have a 3 in 1 online trading account with ICICI Direct. I have invested in 5-6 SIPs in different AMCs @Rs.1K/SIP/month for the last 2 years.
    Now, if I want to switch over to direct plans with AMCs directly, can I use the same Demat a/c that I had with ICICI Direct ? Or should I open a new Demat a/c ?
    Also, will I be able to do all the transactions and see my portfolio online 24/7 with Portals such as MF Utility etc.?

    Thanks & Regards

  • Anoob says:

    Dear Srikanth,
    Could you please help me sort out the following scenario.
    I have recently invested in 5 Mutual funds SIP, via my distributor/broker, 1000 INR per month for each fund in the SIP, and all 5 are regular plans. I later heard about the direct plan and got to read your article. Now that I have these 5 SIPs running, is it possible to switch from these regular plans for all SIPs to direct plan/schemes ? I have done a bit of research myself, and here is what I have got:
    1. I reached out to my distributor and told them I need to switch to direct plan, they said minimum investment for direct plan is 2 lakhs, and also SIPs don’t have direct plans. I am not very sure if this is correct, may be you can help.
    2. I reached out to the respective AMCs of the 5 funds which I have invested for help, since I was unable to register in their Websites for statements. The response from AMCs was that the mutual funds may be held in demat mode that could be the reason. Upon further enquiry and checking cdsl statements, I realized all my SIPs are in demat form. And when I asked my distributor to convert this to physical form, they said its not possible, the only way out is to stop all the SIPs and start again. Is that true ?
    Appreciate your opinion here, I hope your expertise can help me decide whether I can convert my existing 5 SIPs to direct plans, which is the goal here.

    • Dear Anoob,
      1 – Sorry to say that your distributor is absolutely incorrect !
      2 – you can switch from a regular plan to a direct plan. It is entirely up to you to decide whether you want to inform the mutual fund advisor. However, be sure to opt choose the direct option while making the switch online. If you are doing it offline, your application form should clearly state ‘direct’ after the name of the scheme and also in the place of ARN code. Though many mutual fund houses have stopped levying exit load on switching to direct plan from the regular plan of the same scheme, you should check whether your fund house also follows the same policy. You should also consider whether the switching will invite any capital gains taxes as switching is considered a redemption from the existing plan and a new purchase in the new plan. You should consider these two aspects before taking a final call.

      One more option is, to discontinue existing SIPs and start investing in same funds but Direct plans through Fund house websites or through online platforms like MF Utility.

      • Anoob says:

        Thank you very much for your prompt response.
        Just FYI, I called up these AMCs in the meantime and enquired about switching these 5 SIPs to direct plan, but they said since the MF units are allocated in demat form, I need to first rematerialize them, stop the SIPs and start in direct plan again.
        The only question I have is whether it is worth it to terminate these 5 SIPs, rematerialize them and start the direct plan of these 5 SIPs separately, considering the SIP processing fees have already paid off. Appreciate if you could just provide your thoughts here. I know in the long run, there is a huge margin that i may lose but I am also thinking about convenience here.

        • Dear Anoob,
          Instead as suggested, you may just stop future SIPs in these regular plans and just hold on to the current units.
          Set up new SIPs in the same schemes but Direct plans and continue your investments.

  • sunil says:

    Hi Sreekanth,
    First of all, thanks a lot for creating such a nice blog for new investors like me.

    I’m planning to start a Mutual Fund Investment in SIP mode for atleast 10 years duration. Now I have few questions:
    1. You have mentioned about CAMS and one other online platform for direct investment. Which one is more convenient for new investors and is there any transaction fee or agent fee involved?
    2. Like I mentioned I want to invest for long term: Is it a good to have 40% is mid-small cap fund & 60% in large cap/blue chip fund? Is it a good idea? If not please suggest a better one or if its good please suggest few funds in those categories.

    Thanks, Sunil.

  • Chatterjee says:

    Dear Sir,
    May I buy mutual funds in direct mode from CAMS office? If yes, is there any additional charge I have to pay to the CAMS? Please guide.
    Thank you.

  • Abhi says:


    I have been investing via FundsIndia in Quantum LT Equity Fund-Direct (G). Now according to new requirements distributors cannot invest in Direct plans, hence I have been asked to switch to Regular, and they automatically started a regular plan for me from my SIP in April.
    What should I do with my existing direct MF which I am investing since last 4 years?

    I want to continue in direct plan, can I go to quantum MF and continue investing in the same folio as a SIP?
    Or should I switch and move all my money from Direct to regular plan in FundsIndia. Will I loose money in this, as I think this will be like a new investment, and I would end up buying new NAVs for the regular plan, from my direct money? Please advise.

  • Vasu says:

    Hi Sree,

    Thanks for wonderful post on Direct Funds over Distributors.

    I already start investing with Scripbox, however I want to invest my future SIPs in direct mutual funds.

    1. Can I stop the existing distributor SIP and start fresh SIP in direct fund? I can leave my money in existing SIPs for longer time as I don’t need immediately.
    2. Can I stop my current SIP and exit after 5 years as these are Equity schemes?


  • Srejith Ramesh says:

    “I believe if you are making fresh mutual fund investments or creating new SIPs, you can surely consider investing in Direct mutual funds provided you know which funds to buy. ” – Can you elaborate? What do you mean by which funds to buy?

  • NJ says:


    I am looking at a investment of 20,000 in mutual funds. I constantly go through your articles and have certain funds in my mind picked from your article on best MF for 2017. Can you suggest me a portfolio which has a mix of ELSS (tax saving) & other funds. My risk appetite is low. . I want to go for direct plans. Will that be fine..??

  • Vikram S says:

    Hi Sree,

    Last year 30th of March, I read your blog and invested in Axis Long Term Equity Fund – Direct Plan (G) on the same day. Now it is really performing good. But again for the current financial year FY16-17, I forget to do SIP and I have only 10 more days left to invest. My goal is to invest 1.3 lakhs in ELSS as I don’t have any other investments under 80C. I am ready to take the highly risk funds. But I am confused with several blogs and websites and habituated to read only your blogs. Please suggest me some safe & good returning ELSS funds for a lock in period of 3 or 5 years.

  • Raj says:

    Hello Sreekanth, I’m Planning to start Below SIPs direct plans from Next month. please suggest me whether below portfolio is fine to go ahead with direct plans for 15 to 20 years . My Goal is to build 50lakhs by next 10 yrs and 1 crore by next 15 years.
    SIP Details as below(Monthly Basis)
    Axis Long term equity fund Direct Growth : 2000/-
    Large Cap
    SBI Blue Chip Fund Direct Growth : 3000/-
    Mid Cap
    Franklin India Prima fund Direct Growth : 3000/-
    Small Cap
    Franklin India Smaller companies fund Direct Growth : 2000/-
    ICICI Prudential value discovery fund Direct Growth : 3000/-
    Balanced fund
    HDFC Balanced Fund Direct Growth(Equity based Balanced Fund) : 3000/-
    Debt Fund
    Birla Sun Life Short term fund Direct Growth : 5000

  • Sriraman says:

    I want to invest lumpsum amount of 50000 in ELSS Mutual fund before 15 March 2017. Can you make my folio?

  • Ankur says:

    Invezta is another player in direct mutual funds but does not require CAN registration. Invezta allows you to invest into Direct mutual funds in its platform. You don’t need to go through the pain of creating new account and new folio for each of the AMCs you are investing in. It’s recommendation engine and robo advisor is helpful for the novices. They charge no fees for investments upto 50,000 INR. After that you can choose one of their 79 INR per month plan or 109 INR per month plan based on your requirement.
    If you use this Coupon Code “55C648 ” during signing up, your free investment amount will be increased by 25,000 INR to 75,000 INR.
    The referral program of Invezta allows you to get 3 years of the platform free for every 1 friend you refer as a new investor.
    This websites is a new breed in Indian investing that will attract many new investors.

  • Akash says:

    Invezta is a direct mutual fund online investing portal. Free till Rs. 50,000/- investments. The below code helps you to get Rs. 75,000/- investment limit. If you are a beginner you can use the service as there are no opening charges, excellent interface besides “Direct” mutual fund investments.

    Coupon Code: 55C648

    Apply the above code while you register to get the investment limit of Rs. 75,000/- plus all features for free of cost.

    Honest Disclaimer: I received the above code when I registered. I get Rs. 25,000/- additional limit every time an investment is made through the code above. You will also receive a similar code upon registering and making first investment.

  • Srinivasa says:

    Hi Sreekanth,
    I have some MFs in my icicidirect a/c. Can I transfer all the them to direct plans and have them monitored through MFU? If so, let me know the procedure.


  • Rajinder says:

    Hi Sreekanth,

    I am a british citizen having OCI card which gives me permanent NRI status, i have rs. 1 cr to invest in me NRE a/c in axis bank.

    should i invest in FD or go for MFs, I would like to go direct, would i be able to? with my resident status.

    Please advice.

    Many Thanks in advance.


  • Henry says:

    Dear Suresh,

    First of all I would like to thank you for providing very useful information on mutual fund.

    I need your help on my query. I have decided to shift my SIP’s from regular to direct, in this regard, please advise on below:
    1. While switching to Direct , will the number of units i have accrued through Regular SIP remain the same in Direct ?
    2. Which is better among A & B A) Switching to Direct B) Stopping the Regular SIP’s, leaving them as it is and starting new SIP’s under Direct for the stopped SIP’s

    Thank you.

  • Sandeep says:

    Hi I am NRI based in Sydney, Australia. I am planning to invest in Mutal funds and have below queries if you can help me with –

    1. Which is the best and cheapest online method for me to invest in “Direct funds”.
    2. My risk profile is “High”, I understand the market risks well and my investment Horizon is long term (5 to 10 years) . Which are the right funds for me to pick?

  • Vivek says:


    Till Nov-2016 i was investing in MF via ICICI Direct. From dec-2016 onward i am investing using direct mode.

    Recently i received NSDL Consolidated account statement in which i could see my holdings in direct fund also mentioned.

    Isn’t the investment in direct fund supposed to be with AMC (something like statement only) or do i still need demat for direct fund too? Please clarify.

  • Gour Hari Roy says:

    Thanks for your informative service that you have rendered, I have some investments in old mutual funds of UTI, initially these were of dividend options, subsequently I have switched over to dividend re-investment option. My question is had I switched over to growth option without going for dividend re-investment option, would it have been more beneficial in terms of return

  • Amarnath says:

    Hi Sreekanth,

    I’m new to invest into the mutual fund,for the tax saving in this month I’m planning to invest one lakh at once into Franklin India Tax shield to declare in the tax.So could you please guide me am I thinking right way?
    And will there be any Nav value downwards due to denomination effect.
    It will be a great helpful for your reply.

    • Sreekanth Reddy says:

      Dear Amarnath,
      If you are investing for long-term, kindly do not worry too much about one-time events like Demonetization. It can be a good factor for long-term investments.

  • abhay says:

    Just wanted to ask 1 small thing. Is there a way by which I can choose to buy direct MF plans across AMCs? I mean do i need to register on each AMC separately in whose scheme I want to buy or is there a common platform from where I can buy direct plans of any AMC?

  • Sanket Shirodkar says:

    Hi Sreekanth
    Is it possible to stop regular plan SIP & start new SIP in same fund with Direct plan & redeem regular plan SIP amount once your SIP comes under long term capital gain (LTCG) ?
    instead of paying short term capital gain, exit load & switching formality ?

    • Dear Sanket,
      Yes, Switch is possible!
      But it is treated as normal redemption, so taxes on Capital gains (if any) will be applicable.

      • Srikanth Varma says:

        Hi Sreekanth,

        I’ve tried to invest in HDFC mid cap opportunities – direct fund using myCams app. What’s your opinion on myCams app/

        If the plan name has direct, does that mean direct plan only? Does camsonline is a distributor or fund house? I’m puzzled.

        Please help.

        BR, Srikanth Varma

        • Dear Srikanth.
          I do not have first-had experience on the said APP.
          Yes, if the plan name is Direct, it is Direct plan option only. You can cross check it by looking at NAV of both Regular & direct plans of same scheme. The NAV of direct plan will be slightly higher than regular plan NAV.
          CAMS is an R&T agent & also a distributor.

          • Srikanth Varma Chakka says:

            Ok. Thanks for quick reply Sreekanth.
            I found myCams app to be very easy and convenient to use.

            Although we can take the Direct MFs from CAMS & MF Utility, after quick research, I got to know that there few fund houses that are not serviced by CAMS (Ex: Franklin). Where as almost all fund houses are serviced by MF Utility. But I found MF Utility has way more to go to be as seamless as CAMS. It’s just a personal opinion though! 🙂

          • Dear Srikanth,
            Yes, MFU is a relatively new platform but offers all schemes of different fund houses.
            For list of CAMS services and other R&T agent services funds, click here..

  • Achuth says:

    Hi Sreekanth,

    The Article gives a lot of information..Thanks

    However , i have been waiting to invest in an ELSS direct plan since long . But all the AMC’s i reached say that investing through them is regular plan.

    Even the demat account i hold with kotak is a regular investment as per my advisor.

    Can you help me understand where can i get to invest this elss direct plan and how.
    Request you to suggest best online portals for the same.


  • vijaya says:

    Dear Sreekanth,
    1.What is better Dividend or Growth option ?
    My agent did not explain.
    I trusted him.

    2.Whats the smallest realistic amount that I can start with for Direct Online funds while I am still learning ?

    3.Do I need to track performance every day ?

    4.How do I know that a fund is not doing well and has no future ?

    5.How do I avoid switching funds prematurely and regretting later ?

    Vijaya Paranjpe

    • venkat says:

      1. Dividend/Growth: Generally Growth schemes are better. The following are some of the facts of dividend funds.
      a. Dividend funds distributes dividend in no particular frequency.
      b. Dividend MF may distribute dividend resulting in reduction of the principal amount you have invested.
      c. Dividend distribution is taxed at 25 per cent which is disadvantage for long term equity investors.

      Whenever you can, go for growth funds.

      2. Smallest Amount: Some fund houses supports direct investment of even 500 Rs in SIP. Some fund houses the minimum is 1000 Rs per installment for an SIP.

      3. Performance Tracking: No need to track performance everyday. It is indeed not advisable to check everyday. Checking the portfolio half yearly is a wise practice. You can check quarterly as well but anything less than that would be not advisable.

      4. Fund Status: There are so many tools such as valueresearchonline, moneycontrol which provides rating of funds. You can easily track the return on investment and comparison of peers to find the good fund.

      5. Switching funds: Patience is the key. Do good research, invest and keep calm. Valuate your funds every half yearly. Many time doing nothing is a good choice in long term equity investments.

    • vijaya says:

      Dear Mr.Sreekanth or Mr.Venkat,
      I know I should ask this in my bank. But I need your good advice.
      I need to retire FDs maturing in 2017 and convert the amounts into MFs.
      Which ones should I retire first ?
      Those with the poorest interest rate or by chronology of date ?
      Rates are 8 % and 9.25 %
      And Maturity dates are from May 2017 till October 2017.

      • Sreekanth Reddy says:

        Dear vijaya,
        Firstly, kindly let me understand – why do you want to move from FDs to MFs? May I know your investment objectives & time-frame?

        • vijaya says:

          Dear Mr.Sreekanth,

          I am 54 years old and have only just understood the futility of investing in FDs given the inflation and Tax deduction on FDs and that it is wiser to invest in MFs.

          I would like to know how to retire my FDs and direct that money into MFs.

          I am a doctor ,single and no children and have no goals or objectives.

          I would only like to plan for retirement.

          Will premature retirement of FDs be harmful ?

          Or should I only use savings from bank accounts to invest in Funds instead of making new FD 4yaIgreceipts?



          • Sreekanth Reddy says:

            Dear Vijaya Ji,
            May I know your expected age of retirement?
            Kindly read this article : Retirement planning made Easy!

          • vijaya says:

            I am in good health .
            I want to work till my age of 77 to 80 since I am a Consultant in private practice.
            I am 54 now.

          • Sreekanth Reddy says:

            Dear vijaya Ji,
            Considering your profile, I believe you can plunge into equity oriented products right now. You may switch the FDs which are maturing now to equity funds.
            You may start with Balanced fund +Diversified Equity fund.
            You have the option to invest lump sum amount or can set up STPs (Systematic Transfer plan) from Liquid fund to Equity funds for say next 1 to 2 years.
            Ex – HDFC Liquid fund to HDFC Balanced fund.
            Kindly read:
            Best Equity funds.
            Best Balanced funds.

          • vijaya says:

            Dear Sreekanth,
            Thankyou for replying promptly each time.

            1.My exsisting FDs are going to mature in May 2017 and thereafter.
            You have advised switching FDs to MFs only on maturity.

            I have made two FDs in Aug and Sept 2016.
            Would it be prudent to retire them since I stand to lose only 1 %?

            2.Considering the situation in India right now ,is it a good time to invest in MFs ?
            If yes, which week in November ? Or December ?

            I appreciate your guidance and find your tips valuable.

          • Sreekanth Reddy says:

            Dear Vijaya Ji,
            If you are investing for longer period say >5 years or so, you may pre-close the FDs and switch to MFs.
            Kindly do not try to TIME the markets. It is next to impossible.

          • vijaya says:

            Dear Sreekanth,
            I would like to understand the benchmarks.
            Example :How do Nifty 50,100 and 500 help to decide how a fund is faring (with respect to HDFC Bal.Fund Growth option which i am considering) ?

          • Sreekanth Reddy says:

            Dear vijaya,
            These are indices and constitute certain number of Stocks. These indices primarily give broad idea about how markets are moving/performing. The fund may or may not necessiarily replicate the same, as it may contain different set of stocks/securities. If you want to compare a fund with an index, then the better way can be to compare it with the respective benchmark index of the fund.
            For example : The benchmark index for SBI BLUECHIP fund is S&P BSE 100.

      • vijaya says:

        Dear Sreekanth,
        I read your excellent guidelines for drafting a Will.

        I have a new question about MFs.

        My mother is 81 years old and is a Consultant Surgeon with an active practice.
        She has invested only in Term Deposits all her life.
        I want to know if I may convince her to invest in MFs at her age.

        • Sreekanth Reddy says:

          Dear Vijaya,
          What would be the investment objective? Is it for wealth accumulation, which will be inherited by her legal heirs?

          • Vijaya says:

            Dear Sreekanth,
            FDs are not viable investment options.

            She is 81 and not really bothered about Wealth.

            I manage her money.
            I think Mother will bequeath her assets and properties equally to her legal heirs.
            2 daughters.56 and 54.
            No son.

            Please guide me considering her age.

          • Sreekanth Reddy says:

            Dear Vijaya Ji,
            If you are planning to switch (existing corpus) to MFs, you may consider Equity oriented balanced funds.
            Can set up STP (Systematic transfer plan) from Debt funds (can invest lump sum here) to Equity balanced funds.
            Future investments can be made through SIPs.
            Read : Best balanced funds.


    I have already my own portfolio with all leading Mutual Funds. Uptilnow, I was investing through distributor/agent. Now I want to invest for additional purchases directly. Can I purchase ? The Portfolio number which I already have can be used , I think. What procedure I will have to follow ?

  • davinder says:

    1) what about DSP blackrock tax saver fund

    2) are balanced funds come under ELSS.

  • Sankar says:

    Hi Sreekanth,
    While researching what MF to invent, i red your articles, really informative. Thanks for your service.

    Based on my research, I have sorted out following fund for SIP, could you suggest whether these funds are good for long term, lets say 7 years, 10 years and 15 years?

    Small and Mid-Cap: (10k)
    Franklin (I) Smaller Cos (G) – 2500
    UTI Mid Cap (G) —-5000
    DSP-BR Micro Cap Funds (G) – 2500

    Large Cap Funds: (6k)
    Franklin India Opper —- (3000)
    UTIL Equity Funds (G) — (3000)

    Diversified Funds: (4k)
    UTI MNC Fund —– (2000)
    Franklin High Growth Cos (G) —-(2000)


  • Yagnesh says:

    This article is very helpful for the beginners like me. I have never invested in anything except PPF. I am planning to start investing in ELSS considering my goals: Tax Saving, Mid-term Investment and Long Term Investment. Would you guide me to go for Direct plans? And is there a tutorial available online which can teach me how to start and maintain a good MF portfolio?

  • AMOL says:


    • Dear AMOL,
      If you are investing only in Mutual funds then Dmat account may not be that beneficial.
      Would like to know what are the negative aspects of MFU? (Personally, haven’t used yet, so would like to know).

  • Tarani says:

    Does MFUtility and CAMSOnline both provide platforms to buy Direclt MFs ?

    Anything to note before we chose one of these ?


  • Vignesh says:

    Hi Sreekanth,

    While registering for the MFU to generate CAN. Following details are asked to be filled. ARN / RIA SEBI REGN No and EUIN. I am not sure what needs to be filled for both as I am not a Registered under SEBI.

    Could you please throw some light on it. Can I leave it as a blank since I am a Retail investor ?

  • Vinod Shingan says:

    How Direct plans are beneficial as we are buying them at Direct plan rates. For example when we opt to buy any MF under direct plan the higher rate is applied.

  • Raghu says:

    Hi, Its really a very good article.

    My question : I tried buying some ELSS Direct Funds through online. however, its asking for a Portfolio number, Which I don’t have.
    Can you please give me some more information on it and How to obtain one?

    Thanks in advance.

    • Dear Raghu,
      Some fund houses websites accept only additional investments that is one should have already invested and have Folio number.
      Suggest you to invest one time investment of say Rs 5000 or so in a fund through an agent or other online distribution platforms or through CAMS and afterwards you may use the same folio number to make additional investments.

      Another option is to invest through MF utility platform.

  • Nisha says:

    I invested Rs. 25000 in a mutual fund scheme through HDFC bank. My statement shows that 24,999 has been invested. When do they charge commission?
    I’m planning to do SIP through CAMS once my portfolio no. is created in the funds I want to invest in.

    P.S. In their FAQs they have mentioned trail, brokerage fees. However, they have also attached a note saying that as of 1st October 2015 they have opted out of transaction fees. It’s confusing!



    Please advice if the Mutual Funds Direct Plans be purchased only on line or we can also purchase them by visiting the Mutual Fund Office.

  • Rakesh Sharma says:

    Hi Shreekanth,

    Once people say switch to the other plan like entirely other mutual fund if exiting one not performing well. In that case what to do to transfer all amount(NAV) to new one? or we have to just discontinue existing one and fress start another one.

    if i buy direct MF plan from my broker website like Rmony or Zerodha is it chargable?

    Rakesh Sharma

  • Muthu says:

    Hi Sreekanth, Have few queries reg. Direct Plan
    * do you when is this Direct plan started ?
    * AUM of Direct & Regular plans are separately maintained ?
    * There are many online distributors like orowealth. com who provides 0% distribution cost and claims we can get multiple AMC MFs from single website – is this good approach ? what might happen if these online websites are shutdown in next few years ?

    • Dear Muthu,
      1 – The “Direct Plans” were launched with effect from January 1, 2013.
      2 – Yes.
      3 – Kindly note that these are just Transaction execution platforms and are not the custodians of your investments. Your money will be with the AMCs/fund houses.

      • Muthu says:

        Dear Sreekanth
        Thanks, I did some reading from your website and others
        1 – Thanks
        2 – It seems its the same AUM for both Direct & Regular plan , the only difference is the Expense Ratio.
        3- Thanks
        4 – Read about MFU, but unfortunately online submission of requests are NOT available. We may need to fill the printed form and submit to MFU POS centres.
        By chance do you have any idea when the online MFU functionality will be available ?

  • Savin says:

    Hi Sreekanth,

    I have below ELSS Regular funds started a year ago.

    I understood that it has lock-in period of 5 years and and so no option to switch it to DIRECT plan at this time.
    I wish to invest this amount into another one good folio. So can I stop paying the amount and stay the account alive for next 4 years. Or Any other better suggestion, please let me know.

    Thanks You.

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