Do not forget to track your investments in direct plans of MF

Do not forget to track your investments in direct plans of MF

Investing in direct plans of mutual funds may sound the cool thing to do. But you do not get any help to track your investments. Use online portfolios to keep a track of your investments.

Investors into direct plans of mutual fund often do not look through the entire investment process and the experience that they will have when they choose this route for their investments. Choosing the direct plan is one thing and most people focus on the fact that they will not get help in investing the amount and that they would have to go and directly make the investment. However there is much more to the process than mere investing and hence it is vital that the investor is able to look closely at the details and then see the kind of conditions that they would face over the life of the investment.

Direct plan

A direct plan is an option for mutual fund investors who do not use the services of a distributor in investing into mutual funds. Here the investor will choose a separate plan and the benefit of this plan is that there are no payments to distributors in this plan from the mutual fund which will reduce the expense ratio and hence there would be a lower expense figure here. This translates into a higher return for the investor at the end of the day because they will get a higher net asset value for the same rise or change in the portfolio. This might not look very high in an absolute sense but when taken over a number of years can amount to a significant figure.

Tracking is important

Every investor who is considering using a direct plan needs to broaden their horizon and take a look at the entire investment process. It is not enough to just consider the process of investing and not using the distributors help here because the investment is more than just putting the money in. Investors need to think about the monitoring of the investment too because they need to see that things are going on fine with their investments and also the decisions that they would make with respect to changing their investments in case the need arises. This should shift the focus towards the actual manner in which the mutual fund is performing and whether there needs to be any step to tackle this position.

No help

The situation is such that even if you have a portfolio of investments wherein some are through a distributor and others are not and the distributor wants to track your direct plan investments then they will not be able to do so. Recently AMFI has written to fund houses asking them to stop feeds of net asset values to intermediaries who are not registered with SEBI. There are just a handful of such people and entities registered with SEBI and this effectively means that others will not be able to get their feed. Investors should understand that the situation is that when it comes to the question of looking at their investments in direct plans then they would need to set up some system on their own for its monitoring.

Steps to be taken

The first thing to be done is that the investor should not leave the investment unmonitored and hence they need to think up a way that is suitable for them for this purpose. The best thing to do would be to take a look at their returns periodically on one’s own and this can be done by using online portfolio for the purpose of entering the purchase details so that they will be able to make the necessary calculations. The other way would be to actually hold the units online with the mutual fund itself wherein the return and other details would be available on their website. This might turn out to be the easiest way to deal with the entire situation.

Happy Investing

Source:Moneycontrol.com