Direct mutual funds allow you to invest without paying distributor commissions, making them a more cost-effective option for long-term wealth creation. These plans are suited for investors who prefer a hands-on approach and are comfortable making their own fund choices.
In this blog, weтАЩll walk you through the complete process тАФ from KYC and account setup to choosing the right funds, setting up SIPs, and tracking your portfolio. Read along!
What Are Direct Mutual Funds?
Direct mutual funds are schemes offered by Asset Management Companies (AMCs) without distributor involvement. When you open mutual fund account directly with the AMC, you get access to these plans at a lower cost since there’s no commission paid to agents. Returns from direct plans are typically higher because of their lower expense ratios.
Direct vs. Regular Mutual Funds
The major difference between regular and direct mutual funds lies in who you buy the fund from. In regular mutual funds, investments are routed through intermediaries or advisors who receive a commission. Direct mutual funds are purchased directly from the AMC, so you save on these charges.
Additionally, direct mutual funds have lower expense ratios because they exclude distribution and advisory fees. This results in slightly better performance over time. In contrast, regular mutual funds build in commission costs, which reduce your returns.
Benefits of Investing in Direct Mutual Funds
Direct mutual funds are designed for investors who prefer to manage their investments without going through third-party distributors. By cutting out commissions and providing direct access to the fund houses (AMCs), these plans offer better value and more control.
If you’re exploring how to invest in direct mutual funds, here are the key advantages you should know about.
Higher Returns Due to No Commission
One of the biggest benefits of investing in direct mutual funds is the higher return potential. Since there are no distributor commissions involved, the expense ratio is lower. Over time, this cost saving directly boosts your overall returns, especially for long-term investments.
More Transparency and Control
Direct plans give you full visibility into where your money is going. You choose the fund, track its performance, and decide when to switch or redeem. This level of control is ideal for investors who want to be hands-on and understand how to buy mutual funds based on personal research.
Direct Access to AMCs
When you invest in direct plans, you’re interacting directly with the AMC. This means quicker updates, access to fund details, and official communication without any middleman. If you want to know how to buy mutual funds directly, this direct line to the source helps ensure accurate and timely information.
How to Open a Mutual Fund Account for Direct Investment
Opening a mutual fund account for direct investment is the first step towards cost-effective, self-managed investing. Direct mutual funds, usually, have lower expense ratios because they exclude distributor commissions.
HereтАЩs a simple guide on how to open mutual fund account for direct plans:
KYC Compliance Process
Before you can invest in direct mutual funds, you must complete Know Your Customer (KYC) verification. This includes:
- Filling out a KYC form
- Uploading your identity and address proof
- Completing in-person verification (either offline or via video KYC)
Most AMCs and platforms wonтАЩt allow any investment without successful KYC registration.
Documents Required to Open a Mutual Fund Account
To open mutual fund account, youтАЩll need:
- PAN Card
- Aadhaar Card (or valid address proof)
- Passport-size photo
- Bank account details (cheque copy or statement)
- Signature (for physical or digital use)
Platforms to Open an Account (AMC, Apps, RTAs)
You can open an account directly on the AMCтАЩs website, via Registrar & Transfer Agents (RTAs) like CAMS/KFintech, or through trusted investment apps that support direct mutual funds such as Appreciate.
Each platform offers its interface and steps, but the core requirements remain the same. If you’re figuring out how to buy mutual funds directly, choose a platform that offers easy access, zero commission, and reliable support.
How to Buy Mutual Funds Directly from AMC Websites
Asset Management Company (AMC) websites give you access to direct plans, which typically have lower expense ratios compared to regular plans.
Here’s a detailed look at how to buy mutual funds directly from AMC platforms and what to keep in mind during the process.
Step-by-Step Process to Buy Mutual Funds Directly
To begin, visit the official website of the AMC offering the fund. The next steps are:
- Register/Create an Account: Sign up using your PAN and contact details.
- Complete KYC: Upload documents like PAN, Aadhaar, and a passport-sized photo.
- Select a Mutual Fund Scheme: Navigate to the direct plans section.
- Choose Investment Type: Opt for SIP or lump sum investment.
- Review and Confirm: Check the summary before confirming.
This is the most direct route if you’re exploring how to open mutual fund account online.
Choosing Funds Based on Risk and Goals
Before investing, assess your risk tolerance and investment horizon. Equity funds suit long-term goals and higher risk profiles, while debt or hybrid funds are better for short- to medium-term goals. When you’re deciding how to invest in direct mutual funds, selecting the right fund based on your goals is critical.
Payment and Transaction Flow
After choosing the fund, proceed to make the payment through net banking, UPI, or a mandate-based SIP setup. Once the transaction is successful, you’ll receive a confirmation, and the units will reflect in your demat or folio account.
Understanding this flow is essential when learning how to buy mutual funds most efficiently and transparently.
How to Buy Mutual Funds Using Online Platforms
Online mutual fund platforms such as Appreciate go beyond basic transactions. They offer curated fund suggestions based on your goals, automated SIP reminders, and portfolio health checks.
These platforms act like digital assistants for self-managed investors, especially when exploring how to invest in direct mutual funds.
Advantages of Using Fintech Apps
Fintech apps arenтАЩt just about ease of use; they allow you to invest on your terms. You can analyse fund performance in real time, set alerts for rebalancing, or automate actions like switching underperforming funds.
For investors learning how to buy mutual funds directly, this independence is often more valuable than relying on middlemen.
Verification and Activation Process
Most platforms today offer fully digital onboarding with e-KYC and video verification. But what stands out is how they help you get investment-ready fast:
- Saved preferences
- Guided fund discovery
- Goal-based planning tools are pre-activated once your account is live.
It’s not just how to open mutual fund account, it’s how quickly you can move from signup to strategy.
Tips for Managing Direct Mutual Fund Investments
Once you’ve figured out how to invest in direct mutual funds, managing them effectively becomes the next priority. Unlike regular plans, direct mutual fund investments require you to take a more hands-on approach, from monitoring performance to making timely adjustments. Here are a few practical strategies to help you maintain and grow your portfolio smartly.
Setting SIPs and Monitoring Portfolio
Setting up SIPs (Systematic Investment Plans) ensures disciplined investing by automating regular contributions. This not only helps with rupee-cost averaging but also keeps your investment journey consistent.
After you open a mutual fund account, use the AMC platform or app to track your portfolio’s performance and asset allocation regularly.
Portfolio Rebalancing and Fund Switches
Over time, market movement may cause your asset allocation to drift from your intended plan. Rebalancing helps you stay aligned with your risk profile and financial goals. If needed, switch funds within the same AMC to optimise returns.
This is an important step in managing your strategy after learning how to buy mutual funds directly.
Using Statements and Portfolio Trackers
Most AMCs send regular account statements and offer portfolio trackers that show your current holdings, returns, and transaction history. Use these tools to monitor growth, identify underperforming funds, and plan future investments.
When youтАЩre handling your portfolio, especially after you open a mutual fund account for direct plans, these tools simplify decision-making.
Key Points to Remember Before You Invest in Direct Mutual Funds
Before you start investing in direct mutual funds, itтАЩs important to have clarity on your financial goals, risk profile, and how much involvement youтАЩre comfortable with. Unlike regular plans, direct mutual funds require you to make independent decisions without relying on a distributor or advisor.
This gives you more control, but also more responsibility. If youтАЩre exploring how to invest in direct mutual funds, consider these key points to build a well-aligned and effective investment strategy.
Understanding Your Risk Appetite
Knowing how much risk you can handle is the foundation of any investment plan. Different mutual funds carry different levels of risk, from conservative debt funds to aggressive equity funds.
If you’re learning how to buy mutual funds directly, assess your comfort with market fluctuations and align fund selection accordingly.
Investment Horizon and Goal Planning
Your investment horizonтАФhow long you plan to stay investedтАФshould match the type of mutual fund you choose. Equity funds are better suited for long-term goals, while debt funds work well for short-term needs.
Defining your goals helps you stay invested with purpose and discipline, which is essential when you open mutual fund account for direct investments.
Staying Informed About Fund Performance
Since direct investors donтАЩt rely on intermediaries, it’s crucial to regularly review fund performance, portfolio composition, and market trends. Use the AMCтАЩs website or trusted sources to track returns and changes. Staying informed is key when youтАЩre managing your portfolio and figuring out how to buy mutual funds directly with confidence.
Conclusion
Investing in direct mutual funds gives you greater control, higher returns through lower expense ratios, and full transparency over where and how your money is being invested. It’s a smart choice for self-driven investors who want to avoid advisory fees and take charge of their financial goals.
With Appreciate, you can open your mutual fund account in minutes, access a wide range of direct plans, and manage everything in one place. Plus, Appreciate helps you diversify globally with access to US stocks and ETFs. Download the app now!
FAQs
How to open a mutual fund account online for direct investments?
To open a mutual fund account online for direct investments, visit the official website of the mutual fund house (AMC) or use a trusted app that supports direct plans. Complete your KYC, link your bank account, and set up your profile. This is the first step if you’re exploring how to invest in direct mutual funds or how to open a mutual fund account digitally.
What are the risks involved in buying mutual funds directly?
The risks involved in buying mutual funds directly include market volatility, a lack of personalised advisory, and choosing unsuitable funds without guidance. If youтАЩre looking at how to buy mutual funds directly, make sure you understand your risk profile and investment goals.
Can I switch my regular mutual fund to a direct one?
Yes, you can switch your regular mutual fund to a direct one by submitting a switch request through the AMC or transfer your units by redeeming and reinvesting. If you’re figuring out how to invest in direct mutual funds efficiently, switching from regular to direct is a common step to save on commissions.
Is it better to invest via the AMC website or aggregator apps?
If you want direct plans with zero commissions, it is better to invest via AMC websites. Aggregator apps offer convenience, but some may only offer regular plans or charge service fees. When exploring how to buy mutual funds, check if the app supports direct plans before proceeding.
Are there any charges or hidden fees in direct mutual funds?
There are no hidden fees in direct mutual funds. They have lower expense ratios since there are no distributor commissions. When you open a mutual fund account directly through an AMC, you’re choosing a cost-effective way to invest.
Disclaimer: Investments in securities markets are subject to market risks. Read all the related documents carefully before investing. The securities quoted are exemplary and are not recommendatory.
