There are two types of mutual funds, one is a regular one, and the other is Direct mutual funds. The regular mutual funds are the ones that need to be purchased with the aid of a broker, while direct mutual funds, which are also known as direct plans, can be purchased directly by the investor from the fund house or the AMC.
Direct mutual funds have been considered a great boon to investors since their introduction. This plan provides many benefits to the investors, making it an attractive vehicle to park their investments. Here are the top 5 advantages of Direct Mutual Funds:
Direct mutual fund plans are less expensive because they eliminate distribution and trial costs, resulting in a lower total expense ratio(TERs) and a higher net asset value (NAV). Direct plans with lower prices have higher NAVs and higher returns.
- Direct Interaction with Funds:
Direct Mutual Fund Plans allow the investor to interact directly with the fund. The broker bears the entire burden in the Regular Plan approach, so you are unfamiliar with the final product or even the AMC. In direct investment, the investor interacts directly with the investment, AMC, and establishes a direct link with the principal.
- Offers High returns:
Direct Mutual Fund Plans also perform better and have a more significant impact when market returns are lower. You don’t mind the extra cost in a high-return scenario. On the other hand, direct plans can make a much more significant difference when markets are volatile and returns on other investments are difficult to come by.
- Seamless Investment process:
Direct Plans simplify the entire mutual fund investing process. The majority of equity fund investors in India have a small amount of money to invest. Such a corpus does not necessitate a great deal of complexity or nuanced analysis. In such cases, direct plans may be the most effective.
- Works Better in the long run:
When we talk about a longer time frame, direct plans improve returns significantly more. Because mutual fund SIPs are based on compounding principle, the cost-benefit of Direct Plans is compounded over a more extended period. This makes the Direct Plan much more meaningful over more extended periods of 10 years or more.
While you don’t need a brokerage firm to help you deal with direct mutual funds, we at Tradeplus can still make the investment process easier for you. Infini MF is a cross-platform application available on both Android and iOS platforms; our expert engineering team designs this application to allow investors to choose the suitable mutual funds to invest in. The app comes with some of the best analytical features that will help you make the right call and act as a medium to track your portfolio.