From 1st of January 2013, all fund houses have introduced Mutual Funds Direct Plan.
This powers the investor to directly invest in funds by bypassing intermediaries like advisers, banks and other financial institutions who promote mutual funds.
The direct plan reduces the expense ratio marginally because there is no commission paid to intermediaries because the customer has approached the fund house directly which results in more wealth.
1% to 2 % of benefit per year from direct plan may look small but if one stay invested for longer period, it will make huge difference.
Customer has to mention “Direct” in the space provided for ARN code and the application has to be given to the fund house directly or service centers like CAMS or Karvy. Some mutual funds offer online option too.
If a customer is well versed with mutual funds and not dependent on expert opinion, then this direct plan is definitely a boon. Else conventional option through an intermediary will do good. This option is available in all categories from debt to equity.
The fund houses declares NAV of direct plans separately by annexing “Direct Plan” to the name of the fund.