When it comes to investments, people generally tend to take cautious steps. They would prefer to make informed decisions while moving forward. There is a lot of confusion involved in choosing the right fund and checking if the investments made will bring good returns. So, let’s learn about the two major types of mutual funds, and then, compare them.
Direct Mutual Funds:
These are the funds that an investor can buy directly from an Asset Management Company (AMC). Intermediaries and brokers are not involved in the case of direct mutual funds. As the name suggests, investments are made directly with the AMC. Commission and distribution fees are not charged, and transaction charges are not required, in the case of SIPs or lump sum investments.
Regular Mutual Funds:
These are the funds that investors buy through a broker, distributor, or advisor. When an investor buys a regular mutual fund, the fund house pays a commission to the intermediary. The AMC adds the commission to the expense ratio.
Comparison:
As humans, we always look for the best options at the least price. If it were everyday goods like shoes and clothes, getting a good deal works to your benefit. But it’s not that simple with mutual fund investment, as huge amounts are invested in order to build wealth, making educated decisions a necessity.
For a first-time investor, there is a lot of apprehension in the world of investment. They will seek advice from anybody and everybody. They will try to follow anything, in order to safeguard their money. But not all advice is good advice. And this is where regular mutual funds come into play. A seasoned financial planner or an advisor from the intermediary will take care of the investments, in the case of regular mutual funds.
Why regular mutual funds are better than direct mutual funds?
- Direct mutual funds are good for the “know-it-alls” and the “do-it-yourselfers”, in terms of investment and personal finance. But for those who prefer expert assistance when it comes to investing, regular mutual funds are the best choice.
- Regular mutual funds appear to be expensive, due to differential commission charges. But what’s wrong in spending a small amount for advice from trustworthy sources? Also, in times of market volatility and turbulence, it is definitely better to let the experts do the job for you.
- The market turmoil affects even the investment savvy amongst us. For instance, in recent times, the debt funds of BOI AXA and DHFL fell over 50%. We advised our investors to be cautious of the concentration risk these funds have. Similarly, with equity funds, investors tend to exit when the markets are going down. It is important not to panic and stay put through volatility in equity.
As an investor, would you prefer losing your hard-earned money over such unexpected turns, or would you rather consult an expert who has enough knowledge to deal with such situations? There’s no point in repenting after your returns turn red, right? So, spend a little extra for an experienced advisor and invest safely for sound returns!
For those who do not have the time, knowledge, and patience to keep an eye on their investments, regular mutual funds are the go-to option. Also, financial security is important. Eyeing on high returns without planning properly, or worse, no planning at all would turn out to be dangerous. So, having an experienced advisor and adopting a planned approach is always better.
Why FundsIndia?
FundsIndia, known for its advisory services, has always been keen on protecting the money of its customers. Here’s why you must choose FundsIndia to invest in regular mutual funds:
- Expert Advisory – FundsIndia houses 100+ NISM certified, expert advisors who are more than ready to help you choose the right fund.
- Understanding the investor – If you are a new investor, the advisors get to know about your lifestyle, your risk appetite, and your monthly investment. Based on this, they will be able to suggest the right fund or design a portfolio for you. Know more about our expert advisory team here.
- Goal planning – After you create an account with FundsIndia, you will be provided with a dedicated advisor. This advisor assesses your way of investment and will help you design a great financial plan.
- Retirement planning – It’s never too early to plan for your retirement. In fact, it is better to start early, and this applies not only for retirement planning but also for financial planning. Seek the experts to get the best of advice.
- Consolidate your investments — Are your investments scattered in different platforms? Worry not! You can consolidate them all under one platform, FundsIndia, in order to get an integrated view of all your investments.
- Deep analysis of your investments — Advisors will not stop after they help you with planning. After you have started your investments, they will help you review your portfolio and also rebalance it, in order to steer it in the direction of attaining your goals faster.
- Transparency in commission charges — FundsIndia does not hide the brokerage that is charged for each investment. If you are an investor, you can view the commission charges for each fund here.
Instead of investing from other platforms with hidden charges, instead of being pushed into paid products in the future, let your first choice be the best!
Open a free-for-life account with FundsIndia and start investing!
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A true ‘fee only’ SEBI Registered Investment Adviser will always suggest DIRECT plans. They give unbiased bespoke advice, suggest researched products and act as fiduciary to their clients. They do charge fees for their service like any other good professional, but that’s reasonable and worth it. As DIRECT plans are commission free there is no conflict of interest. Based on the client’s risk profile, they advise what is most appropriate to them. On the other hand Mutual fund distributors may get tempted to suggest schemes of any AMC offering better commercial terms to them irrespective of scheme performance or its suitability to the clients.
Nice explanation about the Regular mutual funds & Direct Mutual funds. Both have its own benefits