Buying your first mutual fund – Direct mutual funds

Buying your first mutual fund should be profitable, simple and straightforward. Being profitable is very important as buying a mutual fund entails costs and we would want to buy a mutual funds where they costs are minimum so that our profits are maximized. Most of us buy mutual funds from a distributor and a distributor always charges a commission and we don’t even know about it. We will discuss a DIY – do it yourself way to buy mutual funds with incurring costs. 

When we buy a mutual fund we typically buy it from a distributor. Someone is advising us that its good to buy a a certain mutual fund. We may or may not know about it but the person advising us to buy the mutual fund is a distributor of the mutual fund house. The advisor may also suggest various funds, which would mean that the advisor would be the distributor of multiple mutual fund houses.  The distributor is paid by the mutual fund house out of your returns without you even knowing about it. We can get into the technical details of it but for a first time mutual fund buyer, its not very important. however, you can read it up on the internet for your understanding.

Direct mutual funds are kept secret

For e.g. you want to buy e.g. you want to buy HDFC Index Fund – Nifty Plan ( not promoting this fund, just as an example), you can buy it directly from HDFC Mutual Funds or you could buy it from a distributor. If you buy directly from HDFC Mutual Fund, then they will not charge you the money they pay to the distributor and hence you make a higher return.

So if you buy  HDFC Index Fund – Nifty Plan  directly from HDFC mutual fund vs a distributor, your gains would be higher for the amount purchased directly from HDFC mutual fund vs the amount purchased from a distributor

  • So buy all mutual funds directly.
  • Mutual funds would not want customers to buy from distributors and not directly. If all customers bought directly, they would not be able to pay their distributors out of your returns.

You can go to the website of the mutual fund house and buy online and directly from them, some examples given below

  1. HDFC Mutual Fund

  2. ICICI Prudential Mutual Fund

The problem is if you are buying multiple mutual funds say HDFC Mutual Fund, ICICI Prudential Mutual Fund you would need login in to various sites and maintain communication and track various places to see your mutual fund. myCAMS provides a convenient platform to buy multiple mutual funds directly via a single platform

myCAMS is a convenient place to buy

You can register at myCAMS and buy mutual funds directly. Registering on the site is very easy, you can follow the simple instructions and you are done.  The various mutual funds that you can buy from myCAMS are given below

Mutual Fund Code Mutual Fund Code
Aditya Birla Sun Life Mutual Fund B DSP BlackRock Mutual Fund D
HDFC Mutual Fund H HSBC Mutual Fund O
ICICI Prudential Mutual Fund P IDFC Mutual Fund G
IIFL Mutual Fund IF Kotak Mutual Fund K
L&T Mutual Fund F PPFAS Mutual Fund PP
SBI Mutual Fund L Shriram Mutual Fund SH
TATA Mutual Fund T Union Mutual Fund UK

Source: https://www.camsonline.com/InvestorServices/COL_ISSMSBack.aspx

How to start?

  1. Register on myCAMs
  2. Start a SIP for buying an index mutual fund – Read: Investing beginners wanting to be wealthy, start with Index Mutual Funds
  3. Learn by educating yourself on mutual funds and equities in general

 

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