4 Reasons To Invest In Direct Mutual Funds

Securities Exchange Board of India (SEBI) has come out with several reforms, keeping investors welfare in mind. One such reform was the introduction of direct plans in mutual funds.

Though many investors are familiar with direct plans in mutual funds, they are uncomfortable while actually investing in these mutual fund schemes. Many investors still have doubts regarding direct plans of mutual fund schemes.

4 Reasons To Invest In Direct Mutual Funds

Investors can invest in direct mutual funds through the mutual fund company (website). Regular mutual funds can be bought through mutual fund advisors, brokers or distributors/intermediaries.

Investors earn approximately 0.5% higher on equity mutual funds and 0.2% higher on debt funds vis-a-vis direct mutual funds.When you buy a regular mutual fund, the mutual fund company pays a commission to the agent. This commission is an expense to the company and hence, recovered from the investors. That is why the expense ratio is higher for regular mutual funds compared to direct mutual funds. The expense ratio measures the costs incurred by the company to operate a mutual fund.

Investors who are familiar with mutual funds can invest in the direct plans of mutual funds schemes. Investors don’t prefer investing in direct mutual funds as they may not have the necessary knowledge or time to manage the investment. If you invest in direct mutual funds, you save on commissions paid to life insurance agents. 

There are no eligibility criteria to invest in direct mutual fund schemes. However, investors must be aware of risk appetite and financial goals to invest in direct mutual funds.

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4 Reasons To Invest In Direct Mutual Funds