Little over three years after mutual funds (MFs) started offering direct plans for all schemes, it’s becoming easier for investors to invest in them. Two online portals—Oro Wealth (by Alpha Fintech Pvt. Ltd) and Invezta (by Valuefy Solutions Pvt. Ltd)—are among the newest robo advisors, but also offer direct plans. This is in addition to three other ways in which you can invest in MFs through direct plans—1) a fund house’s website, 2) myCams (the online investment portal of Computer Age Management Services or Cams), and 3) Mutual Funds Utility (MFU) portal, sponsored by the Association of Mutual Funds of India (Amfi).
MFU and myCams also allow investors to invest in schemes that they may have invested in earlier through distributors; in other words, regular plans.
Direct plans come with a lower expense ratio. According to the data by Value Research, the average expense ratio of direct plans of equity schemes with a corpus size of over Rs.1,000 crore is 1.51% as compared to 2.28% of regular plans. The difference between expense ratios of the two types of plans is as low as 10-50 basis points in some schemes and as high as 100-148 basis points in some others. One basis point is one-hundredth of a percentage point.
But are direct plans for you? Is a lower expense ratio enough reason? Before we come to that, let’s take a look at what the online platforms have to offer and whether they’re worth it.
What’s on offer?
The two robo advisors, Oro Wealth and Invezta, will offer advisory service and a do-it-yourself (DIY) product.
Invezta offers 16 fund houses at present, but this will increase over time. Oro Wealth has tied up with MFU so it offers the same number of fund houses as MFU, which is 25 at present.
Both offer lump sum and systematic investment plan (SIP) routes, and advisory services. Once you open an account and sign up, you can set goals and a set of schemes will be recommended accordingly. Your portfolio will be monitored and changes may be suggested from time to time. This is similar to other robo advisory services.
If you choose to go with MFU directly, even then you get 25 fund houses. It allows you to buy and sell mutual fund units, switch between schemes and invest through SIPs. myCams offers 11 fund houses that are available for additional purchases, redemptions and switches, and in five of these you can make fresh purchases and SIPs.
