Invest In Mutual Funds: Cut Out The Middleman

Investing in mutual funds without an agent is a feasible option for those who have the time, knowledge, and discipline to manage their investments independently. While it can be a convenient way to save on agent commissions and fees, it also means taking on more responsibility and facing potential challenges. Here are some key considerations and methods for investing in mutual funds without an agent:

- Direct Mutual Fund Plans: Opting for direct plans offered by mutual fund companies can help investors save on management fees and potentially achieve better returns. However, it requires more time and effort for research, decision-making, and portfolio management.

- Mutual Fund House (Asset Management Company): Investors can invest directly through the asset management company's website or app-based platform. Some companies may require a physical visit and submission of application forms, KYC documents, and initial investment cheques. This approach may involve repetitive application processes with each fund house.

- Third-Party Online Platforms: Investors can use third-party apps or platforms to invest in mutual funds without a Demat account. These platforms often provide an easy investment process, especially for new investors, with basic KYC requirements and a user-friendly interface.

- Registered Mutual Fund Advisers: The Association of Mutual Funds in India (AMFI) has registered mutual fund agents who can assist investors. These agents can provide guidance, handle paperwork, and offer information on the latest schemes. Investors can access the AMFI website to find and select agents based on their qualifications, experience, and expertise.

- Banks as Mutual Fund Agents: Banks also act as mutual fund agents, making them ideal intermediaries when investors are sure about the specific fund they want to invest in.

Direct plans: buy from the AMC website, no brokerage fee

Direct plans are a type of mutual fund scheme that allows investors to invest directly, without the involvement of a distributor or agent. This means that investors can avoid paying distributor/agent commissions, which can result in higher returns over time.

When investing in direct plans, individuals can choose between the offline and online modes. The offline mode involves physically visiting the nearest branch office of the Asset Management Company (AMC) and filling out the necessary forms, while the online mode allows investors to purchase mutual funds directly through the AMC's website.

To invest in direct plans through the AMC website, investors must first open an account with the Mutual Fund House or AMC. This typically involves providing similar information to what would be included in a physical application form. However, the registration process may vary from one AMC to another.

During the registration process, investors should choose the "Direct" option under the "Plan Type" section. They will then need to select the specific scheme they want to invest in and the option that aligns with their investment objective, such as Dividend or Growth.

Next, investors should provide additional investment details, including their Systematic Investment Plan (SIP) or lump-sum preferences, and indicate whether they are working with a Registered Investment Adviser (RIA). Bank details, including the name, account number, IFSC, and account type, will also be required.

Once all the necessary information has been provided, investors should carefully review their entries to avoid any issues later on. Some AMCs may require validation of the application form submission through a one-time password (OTP) sent to the investor's registered email or mobile number.

Finally, investors can complete the transaction by making the necessary payment through their chosen method. A confirmation will then be sent to their registered email or mobile number.

It is important to note that not all online portals offer direct plans, and banks are mutual fund distributors and therefore cannot offer direct plans on their web portals. Additionally, investing in direct plans may not be suitable for all investors, especially those who are new or inexperienced. In such cases, seeking the guidance of a mutual fund distributor and investing in Regular Plans may be a better option.

Visit the branch office: fill out application forms yourself

If you want to invest in mutual funds without an agent, you can visit the branch office of the mutual fund house and fill out the application forms yourself. Here is a step-by-step guide to help you through the process:

Step 1: Visit the Branch Office

Locate and visit the branch office of the mutual fund in which you want to invest. You can find the address of the branch office on the mutual fund's website or by contacting their customer support. Make sure to carry all the required documents with you, including proof of identity, proof of address, and bank account details.

Step 2: Obtain the Application Forms

Once you are at the branch office, ask for the application forms required to invest in the mutual fund. There may be multiple forms to fill out, depending on the type of investment you want to make. For example, if you plan to start a systematic investment plan (SIP), you will need to fill out a separate form for that.

Step 3: Fill Out the Forms

Take your time to carefully fill out the application forms. Provide all the requested information accurately and legibly. Here are some key details that you may need to include:

• Your full name and address
• Bank account details, including the account number
• The number of units you want to invest in or the lump sum amount
• Nomination details (if applicable)
• Your signature

Step 4: Submit the Forms

After completing the forms, submit them to the branch office staff. They will guide you through the rest of the process, including making the investment and providing you with any relevant documents or receipts.

Step 5: Follow Up

Remember to keep a copy of the completed forms for your records. Note down the date of investment and any other important details. If you have opted for a SIP, make sure to set up the necessary arrangements with your bank to ensure timely payments.

By following these steps, you can invest in mutual funds without the need for an agent. Remember to do your research, understand the risks involved, and make informed investment decisions. Good luck with your investments!

Third-party online platforms: easy investment process

Investing in mutual funds without an agent is now easier than ever, thanks to the internet. One way to do this is through third-party online platforms, which offer an easy investment process. These platforms are typically registered with Asset Management Companies (AMCs) as agents or distributors and earn a commission when you invest through them. Many banks are also registered as agents or distributors of AMCs, so you can also invest through your bank's website or mobile app.

Choose a Third-Party Platform:

Select a reputable third-party online platform that allows you to invest in mutual funds. Some popular options include platforms like Groww, Zerodha, and CAM, among others. These platforms often provide an easy-to-use interface and simplified investment processes.

Complete Your KYC (Know Your Customer):

Before investing in mutual funds, you need to complete your KYC process. This is a one-time requirement and can be done online or by submitting the necessary documents to the platform. The documents typically include a recent passport-sized photograph, proof of identity (such as a passport or PAN card), a copy of your PAN card, and proof of address (such as an Aadhaar card).

Register and Fund Your Account:

Once you have completed your KYC, register for an account on the third-party platform. You will need to provide personal information and set up your login credentials. After registering, you will need to fund your account using your bank account.

Select the Mutual Fund(s) to Invest In:

The third-party platform will typically offer a range of mutual funds to choose from. Research and compare the different funds based on your investment goals, risk tolerance, and the fund's past performance. Consider factors such as the fund's investment objective, fees, and historical returns.

Invest in the Mutual Fund(s):

After selecting the mutual fund(s) that align with your investment strategy, you can initiate the investment process. Decide on the amount you want to invest as a lump sum or through a Systematic Investment Plan (SIP). Follow the platform's instructions to complete the investment process.

Monitor and Manage Your Investments:

Regularly review your mutual fund investments by logging into your account on the third-party platform. Keep track of the fund's performance, and make adjustments as necessary. Some platforms may also offer features like automated tracking tools and personalized reports to help you stay on top of your investments.

Remember to do your research before choosing a third-party platform and investing in mutual funds. Compare the features, fees, and investment options offered by different platforms to make an informed decision. Additionally, keep in mind that investing in mutual funds carries market risks, and it's always a good idea to consult a financial advisor before making any significant investment decisions.

Registered mutual fund agents: access database on AMFI website

Registered mutual fund agents can access the database on the AMFI website.

How to become a registered mutual fund agent

AMFI (the Association of Mutual Funds in India) has introduced a process to register intermediaries as AMFI Registered Mutual Fund Distributors (ARMFD). This involves passing a certification test and obtaining an AMFI Registration Number (ARN).

ARN requirements

To obtain an ARN, you must be at least 18 years old and have passed the NISM (National Institute of Securities Market) Certification Test. Senior citizens must have attended Continuing Professional Education (CPE). All applicants must agree to abide by a code of conduct and other undertakings.

ARN benefits

The ARN is a unique code that identifies you as an intermediary. It is required to deal with Mutual Funds and to canvass their business.

ARN fees

There are fees for obtaining an ARN, as well as for duplicate cards and renewal.

Online registration

Online registration and renewal can be completed via the AMFI website.

Banks: act as mutual fund agents

Banks have been entering the mutual fund business in droves since the early 1990s, and as of the end of 1993, about 2,300 banks and thrifts were involved in mutual fund sales. Banks sell mutual funds to retain customers and increase fees.

Banks can choose to sell mutual funds directly and be subject to oversight by the banking regulators, but not by securities regulators. However, most banks that sell mutual funds choose to do so through affiliates that are subject to the oversight of the securities regulators.

The American Bankers Association estimates that 3,500 banks—almost one-third of all U.S. banks—now sell mutual funds. Some merely refer customers to outside brokerage houses; others manage their own mutual funds.

Banks that sell their own mutual funds are called "proprietary funds". As of the end of 1993, about 114 banking institutions had established their own proprietary families of mutual funds with assets valued at over $219 billion.

The most direct way for banks to enter the mutual fund business is to offer their own funds. Because banks that sell proprietary funds provide management and advisory services, they are able to generate more fee income than they can under the other two sales options.

According to the Federal Reserve, the main reasons given by banks and thrifts for offering mutual funds were retention of customers and fee income.

Frequently asked questions