{"id":10970,"date":"2022-04-20T06:09:53","date_gmt":"2022-04-20T06:09:53","guid":{"rendered":"https:\/\/kuvera.in\/blog\/?p=10970"},"modified":"2022-04-20T06:09:53","modified_gmt":"2022-04-20T06:09:53","slug":"why-you-should-switch-to-direct-mutual-funds","status":"publish","type":"post","link":"https:\/\/kuvera.in\/blog\/why-you-should-switch-to-direct-mutual-funds\/","title":{"rendered":"Why you should switch to Direct Mutual Funds"},"content":{"rendered":"<div>\n<div>\n<p><span style=\"font-weight: 400;\">\u201cMutual Funds are subject to market risk\u201d we all have heard this one. We also know that this risk comes with great returns.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, in regular mutual fund plans, commissions and broker fees can eat up a significant portion of your overall investment.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Confused? No worries, we did the math for you.<\/span><a href=\"https:\/\/kuvera.in\/blog\/direct-plans-better\/\"> <span style=\"font-weight: 400;\">Check out<\/span><\/a><span style=\"font-weight: 400;\"> an example, where 1.5% commission saved per year can increase your wealth by up to 35% in the long run.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><b>The difference between direct plans and regular plans<\/b><span style=\"font-weight: 400;\">:<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Regular Plans pay commissions to the broker or the distributor. This commission is added to the expense ratio of the scheme. So these plans have a higher expense ratio as compared to Direct Plans that do not have commission expenses.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><b>But then why do people opt for Regular plans?<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Exactly, it boggles our minds too. So we asked people.<\/span><\/p>\n<p><i><span style=\"font-weight: 400;\">\u201cIt\u2019s just 1.5%, right. What\u2019s a big deal?\u201d<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400;\">Umm, you should really check out the math mentioned above.\u00a0<\/span><\/p>\n<p><i><span style=\"font-weight: 400;\">\u201cWell, doesn\u2019t the broker\u2019s advice amount to anything?\u201d<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400;\">Not really, for a very few brokers maybe. Most are just sales agents.\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">More often than not, most people aren\u2019t aware of how much difference it makes. Let me help you there.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><b>Why Direct MF plans are better than regular plans<\/b><\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li aria-level=\"1\"><b>Higher Returns<\/b><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">The returns generated through Direct Mutual funds are higher than that of regular mutual funds, due to the lower expense ratio. As there is no middle-man involved, the AMC will not charge you commission or brokerage fees on Direct plans.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In the case of regular funds, the fund house collects commission through added expense ratio and pays the agent or distributor. That\u2019s why the expense ratio of regular funds is slightly higher than that of direct funds.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<ul>\n<li aria-level=\"1\"><b>Higher NAV<\/b><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">NAV is the value of one unit in the mutual fund schemes, which also indicates the performance of the fund.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The operating expenses of a fund are reduced from its net AUM, which reflects in its NAV. So lower the expense ratio, the higher the NAVs and vice-versa.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In the case of Direct Funds, there are no brokerage charges, which means lesser liabilities on the AMC thus the NAV of these funds would always be higher than that of the regular funds.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<ul>\n<li aria-level=\"1\"><b>No risk of mis-selling\u00a0<\/b><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Having an advisor may seem ideal for beginners, however, an agent or a third party is more likely to promote schemes that mean more commission for them.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">On the other hand, when you directly deal with the fund house, you alleviate the risk of being misled. Hence, opting to invest in direct funds will eliminate the conflict-of-interest scenario.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<ul>\n<li aria-level=\"1\"><b>Independence<\/b><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">In the case of Direct Mutual Funds, you are in full control of your investments. Yes, this means some homework for you: studying the funds. learning how mutual funds work, how AMCs function, and some <\/span><a href=\"https:\/\/kuvera.in\/blog\/mutual-funds-glossary-for-beginners\/\"><span style=\"font-weight: 400;\">key mutual fund concepts<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">But guess what, if you want to stay in charge of your investments, you will have to learn all these things eventually.\u00a0<\/span><span style=\"font-weight: 400;\">So with a little more effort, direct funds give you the independence to make informed choices and higher returns.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><b>Direct Mutual Funds on Kuvera<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Kuvera was India\u2019s first platform to offer direct plans and remains so.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">We let you compare-select &amp; buy different fund plans directly from the AMC without paying any commission fee.\u00a0\u00a0<\/span><\/p>\n<p><a href=\"https:\/\/kuvera.in\/explore\/mf\/c\/all\"><span style=\"font-weight: 400;\">Check out Direct Funds plans on Kuvera<\/span><\/a><\/p>\n<p><span style=\"font-weight: 400;\">If you are planning to switch your regular plans to direct plans, check out our step-by-step guide:<\/span><\/p>\n<p><a href=\"https:\/\/kuvera.in\/switch\"><span style=\"font-weight: 400;\">Switch to Direct plans\u00a0<\/span><\/a><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<p><b>FAQs:<\/b><\/p>\n<p><b>\u00a0<\/b><\/p>\n<p><b><\/b><span style=\"font-weight: 400;\"><strong>1.<\/strong> <\/span><b>What is an expense ratio?<\/b><\/p>\n<p><span style=\"font-weight: 400;\">The expense Ratio also sometimes known as the Total Expense Ratio (TER), shows how much of a fund&#8217;s assets are used for administrative and other operating expenses. The expense ratio is calculated by dividing a fund&#8217;s operating plus management expenses by the total value of the fund\u2019s assets. Therefore, in the case of regular funds, operating expenses reduce the fund&#8217;s asset value, which ultimately reduces the investor\u2019s return on investment.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><strong>\u00a03. H<\/strong><b>ow much tax can be saved on mutual funds?<\/b><\/p>\n<p><span style=\"font-weight: 400;\">ELSS mut<\/span><span style=\"font-weight: 400;\">ual fun<\/span><span style=\"font-weight: 400;\">ds are eligible for tax deductions under the Income Tax Act, 1961.<\/span> <span style=\"font-weight: 400;\">Investments of up to <\/span><span style=\"font-weight: 400;\">\u20b9<\/span><span style=\"font-weight: 400;\">150,000 are tax-free under ELSS mutual funds.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<p><b>3. How to buy mutual funds in India?<\/b><\/p>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Log on to<\/span><a href=\"https:\/\/kuvera.in\/\"> <span style=\"font-weight: 400;\">Kuvera<\/span><\/a> <span style=\"font-weight: 400;\">and set up your account with all the necessary details.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Select the mutual fund scheme based on your investment objectives and risk tolerance and click on it.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">You must type the amount you plan to invest in the mutual fund scheme and the mode as either one-time or monthly SIP.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Then click on invest now.<\/span><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<p><b>4. How to find the best-performing mutual funds in India?<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Just log on to Kuvera, where you will find all the mutual funds with all the important information like their past performance, returns vs index, AUM, TER, Risk, etc. Based on your requirement and risk tolerance, you can select and buy the best mutual fund scheme suitable for you.<\/span><\/p>\n<p>&nbsp;<\/p>\n<\/div>\n<p>&nbsp;<\/p>\n<p>Interested in how we think about the markets?<\/p>\n<\/div>\n<p>Read more: <a href=\"https:\/\/kuvera.in\/blog\/category\/zen-and-the-art-of-investing\/\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>Zen And The Art Of Investing<\/strong><\/a><\/p>\n<p>Watch\/hear on YouTube:<\/p>\n<p><iframe loading=\"lazy\" title=\"Kuvera Insights\" width=\"640\" height=\"360\" src=\"https:\/\/www.youtube.com\/embed\/videoseries?list=PLDSzQdT9nLmCysU31bg4Ngh7WY2p3UiiI\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture\" allowfullscreen><\/iframe><\/p>\n<p>Start investing through a platform that brings goal planning and investing to your fingertips. Visit <a href=\"https:\/\/www.kuvera.in\/\"><strong>kuvera.in<\/strong><\/a> to discover <a href=\"https:\/\/kuvera.in\/blog\/direct-plans-better\/\"><strong>Direct Plans<\/strong><\/a> and <strong><a href=\"https:\/\/kuvera.in\/explore\/fixed-deposit\/c\/all\">Fixed Deposits<\/a><\/strong> and <a href=\"https:\/\/kuvera.in\/user\/login\"><strong>start investing today.<\/strong><\/a><\/p>\n<p>#MutualFundSahiHai #KuveraSabseSahiHai! #PersonalFinance<\/p>\n","protected":false},"excerpt":{"rendered":"<p>\u201cMutual Funds are subject to market risk\u201d we all have heard this one. We also know that this risk comes with great returns.\u00a0 However, in regular mutual fund plans, commissions and broker fees can eat up a significant portion of your overall investment. Confused? No worries, we did the math for you. Check out an [&#8230;]<\/p>\n<p><a class=\"btn btn-secondary understrap-read-more-link\" href=\"https:\/\/kuvera.in\/blog\/why-you-should-switch-to-direct-mutual-funds\/\">Read More&#8230;<\/a><\/p>\n","protected":false},"author":11,"featured_media":10972,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false},"categories":[99,593],"tags":[605,102,94,23,167,250,635,67,401,361,634],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Switch to direct MF Plan | Kuvera<\/title>\n<meta name=\"description\" content=\"Switch your regular MF plan to direct plan and skip the commission and broker fees. 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