how to invest in direct funds?

This post is relevant for you only if you have understood that you should be investing in mutual funds.

And if you are still here, let me ask you - do you know the difference between direct and regular mutual funds? If yes, and you are still continuing with your existing online portal to invest in regular funds for the sake of convinience, then you should read here to know how much more you will make if you go the direct way.

Once you have reached here, I am assuming you are convinced that you should be investing in mutual funds and you should be investing in their direct variants only. However, you would want to know where to start. 

CAMS	You can invest directly through KRAs like CAMS You can also do your Aadhar based eKYC at CAMS Investor Services provided by CAMSList of Mutual Funds serviced by CAMS Use their mail back services to get consolidated statement
Karvy	You can invest directly through KRAs like Karvy You can also do your Aadhar based eKYC at Karvy Investor Services provided by Karvy List of Mutual Funds serviced by Karvy Use their mail back services to get consolidated statement
MFutilties	Another central Agency that allows you to invest directly in mutual funds. https://www.mfuindia.com/  This also allows you to have one CAN number (Common Account Number), through which you can consolidate all your folios across KRAs.
Mutual fund Websites	If you have your KYC done and your correct email address and mobile number stored in the KYC, then you can directly register on mutual funds websites to start investing. some of the sites are like given below  Birla Sun Life mutual funds SBI Mutual funds  DSP blackrock mutual funds ... and many more

Note that all of these have online websites to do your transactions from and as well a mobile apps for both IOS and Android devices.

Personally, I have used the CAMS, mfutilities and mutual fund websites and they are all good. The one that i use most often is the CAMS website and their IOS app, which is really secure and good.

There are websites like coin from zerodha and moneyfront.in that allows investing in direct funds by charging a flat minimal fee monthly of Rs. 50 to 100, irrespective of the amount of transaction done. Hence, there is little cost to this convenience. 

Investing in MFs, the right way

Say you have been an investor in mutual funds since over 10 years now and like how I started, you also started with ICICIDirect, Indiabulls etc - your one stop shop for all investments including mutual funds.

Beleive me, if I tell you that you should not be continuing that approach anymore. This is because around 2013 SEBI has mandated all fund houses to have a "Direct" variation of each "Regular" fund they had.

So, what are "Regular Funds"?
Traditionally, all fund houses would give commissions to brokers that have been helping them to sell the funds to the individual investors. And these commissions would come from the mutual fund corpus and hence contributes to the expense ratio of the fund. This was all done irrespective of whether you bought your fund from a nearby broker, online broker like ICICIDirect, IndiaBulls etc. or you went to CAMS/Karvy offices to make the transaction in the Mutual Fund. These are Regular funds - means broker commision is charged to expense ratio.

Then what are "Direct Funds"?
Direct funds are nothing but, the no-broker variation of the regular mutual funds. All the things remains exactly same from investment perspective - fund manager, holdings etc. However, for these funds the fund houses do not charge the commision to the Direct funds corpus, hence they typically have lower expense ratio i.e. lower cost of maintenance for the fund.

Few key facts to note

• Each fund that exists has both Direct and Regular funds
• No online Broker will sell Direct fund, it's obvious isn't it?
• Expense ratio for Direct funds is typically 50% of that of Regular funds
• %Age annual return for Direct funds is typically 1% higher that regular funds

Now, with all this, you know which type of funds to buy. Beleive me, the cumulating effects of this 1% increase over a longer horizon will definitely make the difference to the corpus.

If you are not convinced on the facts and really want to see how much it would matter, check out the regular vs direct mutual funds post to see the actual power of compounding.