One of the reasons why online mutual fund investing has not become popular has to do with the mind block that one has about how difficult it is to invest online. However, there are several ways by which you can now invest in MFs online and it is easy. You need not to worry about filling forms, signing them, and waiting for days before your investment is acknowledged. In recent times, there are multiple online options available.
One of the reasons to invest online is that it is also cost effective as it allows you to bypass the intermediary. This is known as the direct model, which automatically charge you less compared to routing your investment through an intermediary. Today, every mutual fund scheme comes with two options in the form of a regular plan or a direct plan. An outcome of this move is the differential NAV, which is higher in case of direct plans in comparison to regular plans, even as the portfolio construct is similar. This is solely because of the difference in their respective cost structures.
The suitability of the direct plan is more for a do-it-yourself kind of investor who understands the risks funds and can accordingly choose the fund to invest in. There are AMC websites which allows you to invest directly with them. You can also invest in funds through your online broker.
Then you have platforms like MF Utility (MFU), through which an investor can invest in multiple schemes of any AMC in a single transaction. Before the transaction, one has to get a Common Account Number (CAN) activated. Investors can buy, sell, and instruct Systematic Transfers (STP) or Systematic Withdrawals (SWP) via this platform.
You have apps and portals, like myCAMS from the registrar and transfer agent (R&T) which functions similar to the MFU. Through their app and website, you can buy, sell, and switch between schemes.
The advantage of using this platform is the option to invest through a distributor as well directly. There are several other platforms that allow you to use the online route to investing in mutual funds. One of the advantages of using the online route is to allow you to have a consolidated view of your investments which can come in handy to track how your investments are faring in real time.
