If I invest directly into a mutual fund without the help of a broker/agent I will not bear the entry load. Please explain the procedure of investing directly to a mutual fund? If I invest through a bank, will it be treated as direct investment? Dharmendra Pasricha
No, investing through a bank is not considered as direct investing. If the application form for buying units is filled in and submitted by the investor directly at the asset management company's (AMC) or an investor service centre or specified collection centre, then the investor need not pay the entry load. If the fund has the option of buying units online, that too is considered a "direct investment". An investor can invest directly in a mutual fund in three different ways;
Locate the nearest office of the AMC in your city: Visit the office, fill up the form and submit the documents. Your bank does not double up as a branch office for the mutual fund house. The bank and the mutual fund house, in spite of belonging to the same group, are two different entities.
Check for Collection Centres or Investor Service Offices: If the AMC does not have an office, collection centre or investor service office in the city, you may have to courier your form. If the cost of the courier is the same as the entry load, it would make sense to hire an agent and save yourself the trouble.
Apply Online: Visit the web site of that particular fund house and see if they offer an online option. Here you will need to fill up your personal and investment details as asked in the application form and quote your Permanent Account Number (PAN), which is mandatory. When investing online, mutual funds tie up with various banks for transfer of money. Do check that your bank is on that list.
Another option is to the payment through a cheque/demand draft. In that case, you would need to courier the same. In case you opt for a systematic investment plan (SIP), you can choose the Electronic Clearance Scheme (ECS). Some fund houses do not offer SIP investments, online. You would have to go to a branch to do the same.
Also remember, that an agent will take care of all the paper work and will also be around if you need help at redemption.