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Mutual Funds SIP: Know if you have invested in Direct or Regular Mutual Funds
When one goes through a distributor, broker, or bank, it is usually a regular mutual fund, where distributors get commissions and returns can be less.
Updated : Jan 05, 2021, 04:55 PM IST
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It is always advisable to understand mutual funds and SIPs before investing in them. For better knowledge and understanding of the same, digital financial services platform Paytm's wholly-owned subsidiary Paytm Money is suggesting checks to help one understand if he/she has invested in a Regular or Direct Mutual Fund.
What is a Regular or Direct Mutual Fund?
When one goes through a distributor, broker, or bank, it is usually a regular mutual fund. In this case, mutual fund distributors get paid commissions thus returns can be lesser.
If investors go for the direct mutual fund, they can earn a higher return.
Paytm Money suggests ways to check if one has invested in a Regular or Direct Mutual Fund:
1. You have invested in a Regular Mutual Fund if you have invested in mutual funds through a distributor or a broker or a bank
2. There are many online platforms or apps that let you invest only in Regular Mutual Funds. Thus, investing through an online medium could mean you have invested in Regular Mutual Funds.
3. Investing through the AMC website/app does not automatically mean that you are investing in a Direct Mutual Fund. You need to specifically select the Direct option even while investing through the AMC website/app.
4. Direct funds have the word “Direct” in the scheme name. If you are investing through an online platform, you can easily check this. Some portals can use the abbreviation “Dir” to denote Direct Mutual Funds.
5. If there is no mention of these words or instead there are words like “Regular” or “Reg” then you are probably investing in a Regular Mutual Fund.
6. Before investing you can check the expense ratio and make sure that you are investing in the Direct option.
7. In your CAS, there is a field called Advisor, and if that field is filled with “ARN” followed by a number code, then it is definitely a Regular Mutual Fund. In the same Advisor field if you find values like Direct / 0000000000 / INA100009859, then it is a Direct Mutual Fund.
8. Most of the AMCs mention the variant of the scheme that you invested in. If you cannot find the word “Direct” in either of e-mail/SMS communications, then most probably you are investing in a Regular Mutual Fund.
