Mutual fund investors are not exactly a pampered lot today. If you approach an agent for a mutual fund, he will either offer you an excuse or a Ulip/Insurance plan or both. This is the sad truth for the mutual fund industry after the scrapping of entry loads (the bread and butter for many advisers).
Even if you don’t have a dependable adviser, you can still invest in mutual funds by taking the online route. Online investing may not be very big in India but it’s a convenient option. Here are a few ways you can buy mutual funds online
Most fund companies offer their products to investors at the click of a button. Their websites offer the facility to transact in mutual funds online. This is the cheapest route for the investor because the facility comes absolutely free. However, this is not the most convenient way to invest online.
As a first time investor, you still need to physically approach the fund house or collection centres of either of the RTAs (CAMS and Karvy) to submit the application form. You first download the scheme form from the respective website, fill in your details and submit the same along with the initial cheque, photocopy of PAN card and KYC letter. You also need to apply for a personal identification number (PIN) for online transactions.
Once you are assigned a folio number along with the PIN, all subsequent transactions in the folio can be done online using your bank account. However, you need to go through the entire procedure again if you also want to invest in other fund houses. Only the KYC procedure will not have to be repeated. Remembering 6-7 different PINs for various fund houses can be a big headache.
List of MF AMC’s in India: Click
If you have an online trading account for stocks, you can also buy mutual funds through the same channel provided the broker offers such a facility. Most large brokerages are today linked to the NSE or BSE mutual fund exchange platforms. All you have to do is log on to the broker’s online trading terminal and select the scheme of your choice from the list of schemes available on the portal (you can also place orders offline). The units will be credited directly to your demat account.
If you cannot already access the mutual fund portal, you may have to ask your broker to activate the same. Some brokers also offer online SIP facility for those who do not wish to make one-time lumpsum investments. Since every step is automated, investors do not have to step out of the comfort of their home. In addition, brokers also provide in-house research to help investors identify the best schemes and also allow a consolidated view of all their holdings.
Currently, most brokerages are providing this service free of cost; so you do not incur any transaction costs. However some charge brokerage below a threshold investment amount every time you buy or sell. This will vary from broker to broker.
There are also independent web portals like Funds India and Fund supermart that cater to mutual fund investors, allowing you to buy and sell online at no extra cost. All you have to do is create an online account (free of cost) with them, after which you can get access to the entire universe of mutual funds. The process is fairly simple. FundsIndia, for instance, asks you for the basic details along with a copy of your PAN card and a cancelled cheque of your bank account.
You can submit the duly filled in form and documents with the enclosed prepaid mailer. Note that if you are not already KYC compliant, the portal will also process and verify the necessary documents after which your account will be activated.
All you want to know about KYC: Click