SEBI (Securities Exchange Board of India) has launched the much awaited MF Utility (MFU) on 21st Jan, 2015. Mutual Fund Utility is an AMFI (Association of Mutual Funds of India) initiated online mutual fund investment platform.
Before knowing more about MF Utility Online facility, let us understand different ways of investing in Mutual Funds and ‘Direct’ Vs ‘Regular’ plans of mutual fund schemes.
What are the different ways of investing in Mutual Funds?
How to invest in mutual funds? If you are new to mutual fund investments and want to start investing, you need to know the various ways of investing in MFs.
Currently there are many ways through which you can invest in Mutual Funds (MFs), these are;
Regular Vs Direct Mutual Fund Plans
If you have been investing in mutual funds, you might have observed that there are two types of plans of the same MF scheme are available now. One is a ‘Regular Plan’ and second one is ‘Direct’ Plan.
Around two years back SEBI introduced ‘Direct’ Plans. Now, AMCs (Asset Management Companies) provide you with these two options for each and every mutual fund scheme. (Some AMCs offer Direct plans only )
The main difference between Regular plans and direct plans is the Expense Ratio. What is Expense ratio? Expense ratio shows the amount that mutual funds charge for managing the investors’ money. A Regular Mutual fund scheme has higher expense ratio when compared to a Direct MF plan. The main reason for this is, there is no intermediary involved between you and AMC (Asset Management Company).
For example – The expense ratio of HDFC Top 200 Fund Direct Plan is 1.65% and the expense ratio of HDFC Top 200 Regular plan is 2.23%.
You can observe that the NAVs (Net Asset Values) of Mutual Fund Direct Plans are slightly higher than the NAVs of Regular plans. So, over a long investment period you can certainly benefit from investing in Direct MF schemes.
For example – The NAV of HDFC Top 200 Fund Direct Plan (Growth) is Rs 359.72(as on 20-Feb-2015) and the NAV of HDFC Top 200 Regular plan is Rs 355.32 .
The difference between accumulated corpus of a Direct Plan and a Regular Standard Plan will be significant if your time horizon is say more than 15 years. (Kindly note that investment portfolios of both regular and direct plans of a scheme are same)
How to invest in Mutual Fund Direct Plans?
If you are manually filling MF investment form (application form), you have to select the option called ‘DIRECT.’ You can also invest in Direct plans online (some MF houses provide this facility) by visiting the respective AMC websites.
The main drawback of this is, if you have to invest in 5 different mutual fund schemes offered by multiple mutual fund houses, you have to either visit respective AMC offices (offline) or visit their websites. If there is a change in your KYC details (like change of address or bank account number etc.,) then you need to inform all the AMCs. So, investing in Direct Plans is somewhat a tedious job as of today.
This is set to change…
MF Utility is a shared infrastructure of all AMCs in India to provide online investment facility to mutual fund investors. MFU is sponsored and funded by the mutual fund houses.
The Association of Mutual Funds of India’s (AMFI) MF Utility is a single-window online platform for investment in MF schemes across fund houses. It will work as a web-based transaction aggregator.
MF Utility (MFU) is a browser-based application that connects investors to registrars and transfer agent (RTA), bank, fund house, payment gateway KYC registration agencies (KRAs).
Investors can invest in Direct Plans and Regular Plans through MF utility. This platform will definitely help investors of Direct MF Schemes. The MF Utility portal currently has 25 AMCs which have signed up with MF Utility. Distributors and Investors can register with Mutual Fund Utility.
How to Register with Mutual Fund Utility?
To access MF Utility, you need to get CAN (Common Account Number) activated. The subscription to MF Utility is free of cost. Download the CAN registration form and submit the completed form at MF Utility POS (List of MFU Points of Service). This is a one-time procedure.
If you are not KYC compliant then MF Utilties India will facilitate the KYC registration for investors along with the creation of CAN. (Download KYC registration forms)
As of now, the online transaction facility is not yet activated. The investors may have to wait for few more months to start investing in Direct Plans online. But, the registrations are open and you can go ahead and register yourself as an ‘investor’ with MFU.
Important points, FAQs & Benefits of MF Utility online facility :
So, MF Utility is a centralized mutual fund distribution platform, which will facilitate transactions by customers, distributors and financial advisers in schemes offered by various fund houses on a unified platform. This initiative will help development of the MF industry in smaller towns, besides providing convenience and efficiency to all stakeholders.
( Image courtesy of Stuart Miles at FreeDigitalPhotos.net ) (You may like reading my article on “Top 15 Best Equity Mutual Funds.”)
This post was last modified on July 10, 2023 6:23 pm
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View Comments
Dear Sir,
I want to buy 9 SIP of Rs. 1000 each for 20 years. Please guide me how i should move further to buy Direct plan or how to start it online, so that my cost will be less and i get higher returns. Kindly suggest me a platform from where i can buy different type of SIP from different companies and I can view all of them with a single login.
Thanks in Advance
Dear Dev,
You can open your login account with MFU. Kindly refer to the points given in the above article. Suggest you not to invest in too many funds, not advisable.
Also, read: Direct plans of Mutual funds & their benefits.
Hi Srikant, After introduction of MF utility, what are business proposition or viability of online portals like fun*********mart or myfirst*****.com?
In other words what, how these online MF portals will survive? as compared to online MF, what MF utility offers additionally? please help understanding.
Dear Gautam,
If MFUtility services are marketed well, it may surely take way business of some of the top online portals. Investors from top tier cities who prefer to invest in Direct Plans of MFs may prefer to invest through mf utility.
But it may not take away the entire market share as some of the online platforms are of top class, provide good customer service, lot of value added features and also wider choice (multiple product options not just MF). It is always good to have more options as an investor.
Hi,
Kudos for the excellent qualitative handholding provided.
I wish to start investing in ELSS this FY 15-16.
Decided on Franklin Tax Shield Direct plan.
My Query:
(1) Since primary objective it is avail Tax Benefits coupled with Equity Returns, DO YOU Advise the Dividend Option so that atleast part of the Money is Received Bank by me Tax Free?
(2) Any other ELSS scheme suggested or This one alone is good enough.
Best wishes,
SASHANT
Hello,
I want to start investing in MFs.
Can I do that with this utility directly?
Please give me the steps.
PS: I have KYC done with my demat acc provider
Your article is very good and thanks for sharing information.
I recently started investing in MF with very little knowledge. I have invested in 6 MF in regular plans through MF agent.
Now i want to know how to go for online transactions and how to convert all my regular plans into Direct plans.
My Investment plans are:
1. Axis long term equity fund - SIP
2. HDFC Mid cap Opportunities Fund-G - SIP
3. Birla Sun Life Banking & Financial Sevices Fund-G - SIP
4. ICICI Pru Value Discovery Fund-Regular - One time investment
5. Birla Sun Life MNC - regular - One time investment
6. Motilal Oswal Most Focused Mid Cap 30 Fund - Regular plan growth- One time investment
Please provide information:
1. Which plan is not so promising, so that i can invest in other plan.
2. Please give me websites to register for direct investment and also have scope for withdraw of money in case of emergency....
Regards... A. Gupta
Dear Akhil,
Switching from Regular to Direct plans will be considered as redemptions, so Exit loads (if any) may be applicable as these are treated as fresh investments.
You can visit respective fund house websites and invest in Direct plans. You have to submit 'Conversion Form' available with respective AMCs.
Be aware of tax implications too..
Kindly go through below articles;
Top Equity funds
Top ELSS funds
Top Balanced funds
Mutual fund portfolio overlap tools.
Thanks for the good article. .I have come to know about MF Utility only through you. Good service. Keep it up.
Keep Visiting :)
I started investing in mutual fund from this month only.. Just I bought axis long term equity fund elss for 1000 rs directly from axis mutual fund online site in..I selected option is MF direct growth.. My doubt is "the way I did is it same as mutual fund utility" what is can is it different... How can I show this investment for tax automatically will it reflect in my pan
Dear Naveen,
Good to know that you have chosen to invest DIRECTLY.
You will get a MF statement from Axis and that can be your investment proof to claim tax deduction under section 80c.
Hi Sreekanth,
I am a NRI from USA since few years. When I was working in India I had invested in mutual funds. But now due to FATCA and other regulations I am having touch time getting any brokerage house / online portals / AMC which accepts investments from US NRIs. Are you aware of any Fund houses or online portals which allow US NRIs to invest? Do you have any other suggestions for me on investment in Indian mutual funds?
Thanks,
Sanjay
Dear Sanjay,
Kindly check out this link..click here. Contact them.
Hi sir,
I started investing on mf on April 2015 . I came to know about mf utilities only on may. I got my kyc registered and also my CAN number. My question is if I want to invest using CAN ,should i still contact POS ? And I have already using sip for my old mf . So for creating a new portfolio using CAN should I use the CTF form . And I saw only 6 mf is allowed in that form. So should I put my old mf also in that. Because I ll be giving only one cheque for all fund which I ll be creating, so will my old fund also will be mapped with this cheque?
Dear Arun,
As of now you need to contact POS to invest via MFU. Soon, they will launch online facility to invest in regular & direct MF schemes.
Yes your existing MFs can be mapped.
Hi,
Typically direct fund options are not coming with any ratings (CRISIL etc..). Also they are very recently launched which I understand is based on SEBI's direction to allow direct option just few years back. Should we be concerned that there is no rating for the direct mf options?
Ex: franklin tax shield regualar has a rating while the corresponding direct option does not have any rating and it is recently launched.
Is there a difference in how a direct vs regular option funds are maintained ( from performace and pirtfolio perspective)? Please advise.
Thanks
Dear Harish,
What are your financioal goals?
Whether a fund is a Regular one or a Direct one, the portfolios (fund's investments) are same. It's just the intermediaries are not involved in DIRECT schemes. So, you can get slightly better returns (when compared to Regular one) from a Direct plan.
Sree,
Calculated an FV for education (assuming current value 15 L, 10% inflation for 20 years, rate of return 10%). Based on this I'm looking for a target of 2 Crore in 20 years (For two kids college education). Following are the reasons:
a) A daughter (1 and details years old , one more addition by end of this year.
c) I've a insurance -
Jeevan anandh - started in 2008 for 25 years) 5 L sum assured
Jeevan Surabhi - started in 2005 for 25 years) 1L sum assured
For my wife: started in 2007 for 25 years) 2L sum assured
d) Have a home loan for 23L, monthly EMI of 23K
I was planning to start the SIP on 1 Large cap, 1 diversified , 1 Mid & small cap and 1 balanced.
UTI Equity fund (G)
Franklin India Prima PLus
HDFC Mid cap
Tata Balnced
was in my list.
Allocation of 20 K across these funds monthly , equally.
Can you please suggest....
Thanks
Dear Harish,
I believe that you are under-insured and work on your life insurance requirements on a priority basis. Is your wife an earning member of your family?
Kindly read below articles;
How to get rid off bad insurance?
Top 7 best online term insurance plans
Is term insurance a waste of your money?
College education (Gradution) generally starts from 17th/18th year of the kid's age. So, you need to plan accordingly. All the selected funds are good ones.