For savvy investors, online is the right click

Advancement in technology is all-pervasive. Most things are now available at the touch of a button on a smartphone or a computer. Take a look at some compelling data – more than 460 million Indians use the internet, ranking our country second, after China, in the list of global internet users. Even in terms of the number of mobile phones, India is second globally with more than 1 billion users, out of which 371 million use the mobile to access the internet. The mutual fund industry, too, has embraced the advancement. Investing in mutual funds has never been easier, especially for the tech savvy. The digital revolution has made it possible to conduct the entire gamut of transactions from the convenience of one's home – and even save money in the process.

And for those who find the various offline options confusing, here's a look at the various tools available:

Online platforms

The most commonly used, this category offers three options:

Mutual fund websites – Websites of mutual fund houses which allow one to invest in their schemes.
Online aggregators / third-party platforms – Portals of aggregators or distributors that allow one to invest in schemes of multiple mutual fund houses.
MF association/ R&T platforms – The latest offerings in the segment, these platforms have been launched by the Association of Mutual Funds in India (Amfi) and registrar and transfer (R&T) agents such as CAMS and Karvy for mutual fund investors. These platforms allow investors to transact and view their consolidated holdings.

Mobile applications

Mobile applications have started finding takers as smartphone adoption increases across the country. These are two types: a) mobile applications of individual mutual fund companies and b) mobile applications created by third-party distributors / R&T.

Social media / messaging services

Growing popularity of social media or messaging services such as Facebook and WhatsApp has encouraged mutual fund companies to use these for reaching out to investors and keeping them updated on their investments.

Benefits galore for investors

Convenience: Technology has certainly made it more convenient for us to invest and track our investments. Also, all the information on the underlying investments is available at the click of a mouse minus the hassle of maintaining physical records. In the case of third-party or registrar platforms, one can invest across mutual fund companies in one shot.

Cost-reduction: Savvy investors can reduce costs by investing in direct plans of mutual funds via the individual mutual fund, thereby reducing the brokerage paid to the distributor or financial advisor. An investor's time cost is also reduced as the process is faster compared with the traditional physical mode.

Value-added services: Most platforms also provide value-added services such as customised portfolio and in-house research notes on demand. This is far more efficient compared with waiting for regular product literature in the physical form from the mutual fund house.

The market regulator Securities and Exchange Board of India is of the view that penetration of mutual funds can be increased with the greater use of the internet. It plans to set up a panel to increase mutual fund sales digitally via mobiles and the internet. This, coupled with increasing internet penetration is pushing companies to carve out a retail presence online in addition to their brick-and-mortar structure. Small wonder, even mutual funds have jumped on the internet / mobile bandwagon now.

The writer is director, funds and fixed income research, Crisil Ltd