Times Internet-backed financial services platform ETMONEY has recently taken an initiative to enable 1.7 Cr Indian mutual fund investors to switch their regular mutual fund plan to zero-commission, direct mutual fund (MF) plans without any added paperwork or additional fees. Any investor who has ever invested in mutual funds at any point in time can register on ETMONEY app and switch their regular plan to direct one.
For the uninitiated, regular MF plans are those that require a user to pay a commission to the distributor. On the other hand, direct mutual fund plans are a low-cost alternative to regular plans and eliminate the spend on distributor commissions, thus offering users MF subscriptions on a zero-commission basis. Investors looking for long-term investments can thus transfer an extra gain of approximately upto 1% to their overall investment.
“Indians at large have been denied access to simple, low-cost, and transparent financial solutions for decades. We want to change that and this launch to simplify movement to direct mutual funds is in line with that mission,” said Mukesh Kalra, CEO of ETMONEY.
ETMONEY launched its direct mutual funds’ platform in September which enabled users to invest in over 1,000 direct plans of more than 20 MF companies with zero commission and claims to have seen 4x growth in new investors month on month.
“In this short span of just 30 days, we have already helped ETMONEY’s existing users switch a whopping $20.2 Mn (INR 150 Cr) from regular to direct plans,” added Kalra.
What’s Unique About ETMONEY’s Initiative?
Those who invest in mutual funds are likely to know how cumbersome the process is for transferring a regular mutual fund plan to a direct one. Whether online or offline, one needs to go through several steps and wait for a number of days to get the process rolling.
Through the ETMONEY app, investors can not only switch to direct mutual fund plans within 30 seconds but can also make free, unlimited investments and withdrawal transactions in direct funds, the company said in a media statement.
To switch to a direct plan, one just needs to upload one’s mutual fund statement on the app and, within 30 seconds, get the option to shift a regular plan to a direct one. It also shows the potential savings in commissions and applicable exit loads and taxes, so that the investor can make an informed decision.
The app also assists the investor in getting a transaction statement by providing a step-by-step guide. Once the regular plan is converted into a direct one, investors can continue investing in MF through the app at no additional cost.
Increasing Players In Indian Mutual Funds Industry
According to Association of Mutual Funds in India (AMFI) data on the number of total investor accounts with 42 fund houses, the number of MF folios rose to a record 74.6 Mn at the end of June this year, up from 71.3 Mn at the end of March 2018, a gain of 32.77 Lakh.
This suggests that investors’ trust on mutual funds as a promising and flexible investment product is on the rise.
It is further estimated that as of today, more than $202.7 Bn (INR 15 Lakh Cr) is held in regular mutual funds in the Indian MF industry. “In the recent scenario of volatile stock markets, if investors believe in holding back new investments, then converting one’s regular mutual funds to direct mutual funds can be a great option,” added Ajit Kumar, Wealth Business Head, ETMONEY.
To capitalise on this burgeoning opportunity, ETMONEY is not the only player. There are a number of players such as Wealthy, Scripbox, Fisdom, WealthTrust, MyUniverse, MoneyLover, MoneyView, MTrakr, IOU (I Owe You) in the digital mutual funds space.
What’s more interesting is that ecommerce and digital payment players are increasingly entering this segment to further diversify their product portfolio. The decacorn digital payments giant Paytm has already launched its wealth management platform — Paytm Money. Earlier today (October 11), fintech platform Mobikwik also made a foray into this space. Flipkart is another ecommerce player that is doing its groundwork to enter the wealth management segment.
However, the Indian MF industry has a long way to go to catch up with its western peers. According to a March 2018 Quora post by Money ‘n’ Wealth’s wealth advisor Navin Choudhary, “Today, Indian market is in same position as the US was in 1980. Only 5.7% US households held assets in Mutual Fund in 1980 which in 2017 stands at 68%. Two Reasons: Strong regulatory for Investor Protection and development of multiple channels for distribution. And today Indian Mutual Fund market is having same standards.”
The renewed interest in and digitalisation of mutual funds augurs well for the industry. As platforms like ETMONEY continue to innovate their offerings leveraging advanced technology such as artificial intelligence and new-age players enter this segment, we can certainly trust Navin’s words — “keep faith in mutual funds” and keep investing!