Benefit of #direct mutual fund #investing

From 1st of January, 2013 SEBI introduced the option of investing in the "Direct Plan" of  the existing schemes of mutual funds.( When you send your application to the fund house directly without a "broker code" or transact online without a broker code - it is called a direct investment)

Wanted to check how the "direct" schemes have fared over the "regular" schemes. Roughly for the two year period, the following difference is seen in NAV between direct and regular schemes of randomly chosen equity MF schemes.

Please note that although the percentage difference might look small,the benefit will be seen more" clearly" depending on the absolute sum of corpus invested in the schemes.Example, investor having more than 1 crore in a scheme would have saved more than 1.5 lakhs in two years.( savings till date- not looking into future savings) 

If you know to choose the right schemes ( it is not as complicated as knowing the right "stocks"), you should try and opt for direct investing in mutual fund schemes.

Fund- Growth Scheme Regular Direct Diff* %
HDFC Top 200 352.025 356.157 1.17%
ICICI Pru Dynamic 188.7277 191.4078 1.42%
UTI Opportunities 49.2846 50.0483 1.55%
Franklin India Bluechip 347.7465 353.3355 1.61%
Reliance Growth 786.723 797.0294 1.31%
Sundaram Select Midcap Fund 323.8099 327.5543 1.16%
Birla Sun Life Frontline Equity 161.57 164.3 1.69%
* Difference in returns for the period 1 Jan 2013 to 16 Jan 2015
Direct schemes were introduced on 1  Jan 2013
Wishing you a successful "direct" investing.

7.5X in ten years

How my first equity (mutual fund) investment has fared?

  • Almost ten years since I made my first equity mutual fund investment, the amount is now more than seven times the original investment after a lot of ups and downs. ( CAGR- 22.7%- tax free)
  • This was an NFO investment and the product was "sold" to me. In recent years, I am not a fan of NFOs.
  • Even if the markets fall by half now, the investment would have grown 3.5 times, which is not bad
  • Key learning during last 10 years
    • Direct equity investment is not easy for an individual investor . Need a lot of time, research and also luck to beat the market.
    • Investing through  diversified equity fund or balanced funds with a track record ( through SIP) is one of the easier option available to retail investors.
    • Dont track market news on a day to day basis.
    • Have very reasonable expectations from equity market in terms of returns (inflation + 2-5%).
    • Time in the market is more important than timing the market- but if you buy any asset with a high valuation ( including blue chip shares or equity MF), you may have to wait for a very long time to even  recover your capital. So, try to practice low P/E or low P/B investing which is easier said than done.
    • Understanding risks involved is very important before investing in equity - Volatility, average return, standard deviation ,etc.
    • Finally, Power of compounding is amazing. Experience it- to realize it :-) .
  • Happy new year and happy investing!
This post is not a recommendation to buy any mutual fund.


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