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
hi I I invest through cams ... so here cams cut any commission or it will take commission from NAV.. means I am not understant.. how cams work... I want to invest without any broker/Agent/ any type commission on my Investment and.
So what is the difference between ... like I directly do to HDFC MF office and register there or I go through cams what is the difference here?
ex :- if I invest 5000 through HDFC MF Direct for 1 year with 10% return so NAV = 5500
if i invest 5000 through Cams Direct for 1 yesr with 10% return so NAV = ? (what is the ammunt)
Dear Ankur,
While submitting the forms in CAMS office, if you select the option DIRECT plans then your investments will be made in Direct plans of Mutual Fund Schemes.
In your example - the rate of return won't be same between a Regular plan and Direct plan.
The returns from Direct plans can be slightly better than Regular plans.
Read:
What are Direct plans?
Direct plans Vs Regular Plans - Comparison of Returns.
Is there any option in ICICIDIRECT TO INVEST IN MF through DIRECT PLAN not in Regular Plan?
Dear PRADIP .. They wont get commission if direct plans are offered on their platform. So, I don't think they offer direct ones.
I have following SIP's running
(a) Franklin Prima Fund - 5000 p/m
(b) Brila MIP 25 Growth -5000p/m
(c) ICICI Value Discovery Growth -2500p/m
(d) Mirae Asset India Opportunity -2500 p/m
(e) Axis Equity-ELSS - 1lac lump sump done
I am planning to invest in Tata Balanced Fund for Rs.10000 p/m as a SIP in direct fund. Also I have lump sump of Rs.5lac to be invested. Can you advise where to invest for vision of 3 years for lump sump.
Dear Amit ..Listed funds are good ones (assuming these are for long-term goals).
For 3 year goal - You may consider Birla MIP fund itself. (If you can afford to take risk then you can consider both MIP + and a balanced fund (smaller allocation).
Dear Mr. Reddy,
Very usefule and knowledgable article.
I have 1 query. I am investing in MF through HDFC trading portal. I have invested in MF regular plans last year. Now I want to create SIP for new MF plans. Can I invest in MF direct plans through HDFC trading portal with the same benefits as you mentioned in above article?
Will you suggest me some funds for SIP Rs 5,000 per month for next 12- 15 years. Objective is good returns for long term horizon.
Awaiting your reply
Dear Vishal,
If they provide an option to invest in Direct plan then kindly go ahead. Check with your service provider about any associated transaction costs (like monthly or quarterly fee etc).
Fund picks : Ex -ICICI Value discover, Franklin Prima plus, SBI Blue chip fund, Franklin Smaller companies fund, HDFC balanced fund etc.,
Read:
MF portfolio overlap analysis tools.
How to pick right mutual fund scheme?
Hi
is it possible to convert my fund from NSE to RTA ??
Dear Naveen..It should be possible. Kindly check with online distribution platforms like Fundsindia, scripbox etc.,
Hi sreenath
Your articles are very good. kindly suggest every month 50000 investment. where and how to do.
Dear GEETABALI ..May I know your investment objective and time-frame??
Long term investment for retirement. also i have Gold shop( jewellery). how can i avail start-up- India plan to expand my business, its neary 2yrs old. My No is 9438118983.
Thanks
Geetabali
Dear srikanth
The information given by you is very clear and useful.
You know the bank interest rates are slashed for past 2 years . people like me seiner citizens and retired are living on interest only. We are under confusion where to go for better returns with moderate risk. will you pl advice.
Ramesh babu Y
Dear Ramesh Ji...The investment options can be based on one's financial profile, life style, health status, financial obligations etc.,
Kindly go through this article: List of best investment options.
Hello, If you can please help with the following -
a) Once i am enrolled, can i transact online ?
b) Now i invest directly through portals of various Fund houses which is little inconvenient. Does this portal help me investing in schemes of all major fund houses using a single log in ? And does that attract any extra charge ?
c) all my current holdings will be transferred / linked to CAN which can be viewed through this portal ?
Thanks for help
Dear chiranjib,
1 - Yes.
2 - Yes. No charges.
3 - MF Utility (MFU) will not migrate the existing investments of the investors. However, upon creation of a Common Account Number (CAN), MFU will map the existing folios of the investor/s across Mutual Funds, to the CAN, based on the PAN, holding pattern and other parameters.
For more FAQs on MFU, click here..
Dear Sreekanth,
Please help here:
I want to invest in MFs.I have opened a demat account and trading a/c with sharekhan. But i am yet to invest in MFs. I want to take the Direct Plans of MFs. Hence apart from getting my self registered with MFU what further needs to be done. Should i close my demat and trading a/c with sharekhan as later on it would incur fees?
And other question is if MFU hasn't started online transaction facility yet then how am i going to start investing in Direct plans of MFs. Do i have to wait till that is done?
Dear Harsh,
If you would not like to invest in direct equity and would like to stick to MFs only, you may close the dmat account.
Online transaction facility has now been enabled.
Kindly read:
MF Utility platform for Direct plans.
Direct plans Vs Regular MF plans - Comparison of Returns.
I have purchased mutual funds through my Demat Account which has two different MF Channel Codes i.e. NSE & RTA.
My question is as below :
1. What would be difference between NSE / RTA?
2. Does RTA means I am purchasing direct plan of Mutual Fund house?
Consulted Demat Account Helpline but still not getting clear idea. If you can explain in detail..
Thanks.
Dear Ishan..May I know your dmat account is provided by which service provider? I believe that you are investing in 'Regular plans'.