How to manage Mutual Fund Investments under Direct Plans?

Direct plan gives the investor a choice to invest in a mutual fund scheme without using the services of any distributor or financial advisor.

Jan 22, 2016 08:01 IST India Infoline News Service

Mutual Funds
Direct plans offered by the mutual funds empowers investors to take their own investment decision but the inability to keep a tab on the performance of those investments defeat the purpose of investing ‘direct’.
 
What are Direct Plans?
Direct plan gives the investor a choice to invest in a mutual fund scheme without using the services of any distributor or financial advisor. By choosing this option, an investor agrees that he/she will be responsible for applying, redeeming or do any other transaction independently. Also, since there is no distributor involved therefore any expense such as distributor fee is not deducted under such schemes, which ensures lower expense ratio and higher returns to the investors.
 
Where investors role come into play?
Though many investors are proactive in registering for SIPs or doing timely investments in the mutual fund schemes by choosing a direct plan, they often find it difficult to track the performance of their funds. It is here that the whole cycle of investment planning remains incomplete as it does not involve only the investing process but also reviewing and balancing an investment portfolio. Also, work and other commitments prevent an individual to take necessary actions such as redemption or applying for STP due to the absence of access to distributor services.
 
How can challenges be resolved?
The challenges posed by the investors under direct plan route should not discourage them from taking this route. An investor can overcome barriers by taking few steps such as the creation of an online portfolio and registering online with the mutual fund houses. An investor can register with online portfolio platforms and can access their portfolio performance by inputting purchase details. Any transaction should be recorded on the online portfolio so that it reflects the true value of the investor’s holdings. In this way, an investor can periodically review his/her holdings.
 
The inability to submit transaction requests in physical, investors should compulsorily register with the mutual funds online, which will aid them to place online transactions such as redemption, additional purchase, STP or SIP.

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