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Direct Plans From Mutual Funds –

Direct Plans From Mutual Funds :



Direct Plan -


Direct Plan - Mutual Funds

So direct plans means investment made without any intermediary.Person affiliated to the mutual funds [called as Broker] mediates between the investor and mutual funds.

Till now there were same expenses for all investors though they were through brokers or invested directly.But now investors investing directly in the mutual fund scheme will have separate NAV and expenses towards brokerage won’t be added in the NAV.

How it will affect Distributors – Folios built on Personal relationships won’t affect much more while folio built on Professional relationship may have higher relative impact.Eg Banks.any investor who was forced to purchase mutual fund SIP by Bank will surely look to make it direct to save future cost on the investment.

How it will affect investor – If investor decided to go for direct investment then he need to make self aware about ongoing developments in the industry…such as documentations,entry-exit in proper mutual fund schemes etc.In long term there would be some cost saving but with some self made efforts. I don’t think much percentage of investors will opt for direct mode.

Investors can switch over direct mode by paying applicable exit loads if any.

How it will affect the AMCs – There may be increase in the cost of accounting as there will be additional work of keeping records of direct investors and having NAV for them..There may be  increase in the Exit loads ahead to avoid frequent transactions by the investor.I don’t think industry will promote direct mode of investing…they have done it when there were uniform charges for all investors.Already there are a few direct to investors AMCs but they have always struggled to get the investors.

Though there will be subtraction of distribution charges,it will be in the range of 0-0.50% for general equity scheme while it will be negligible for debt & liquid scheme.If any investor is acquainted well with mutual funds then he may think to go with direct plans.

Possible Common Queries About Direct Plans of Mutual Funds:

  • I am already investing through Direct mode Via SIP / STP.Do I need to switch over Direct Plan for future installments?

No.Future installments will be added in Direct plan of the same mutual fund scheme.

  • I have written Direct in the space provided for brokers code but I forget to mention as Direct plan in application form.Will my investment will routed in direct plan?

Yes,it will went in direct plan.

  • I have started SIP through my broker 3 years back.Can I convert all my future installments as direct just by submitting the written request? can do that.

  • I am NRI.Can I avail this facility?

Yes.But remember TDS will be deducted for NRIs while switching over to Direct plans.

  • Will Exit load applicable if I switched my investment to Direct?

Exit load will applicable as per terms of the scheme,if period of load is not over.

  • I do not have mentioned any broker code in the space provided for the same & do not have mentioned as Direct plan in the application form:

Your investment will routed to Direct plan.

Category: Mutual Funds


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