Over the past few months, several financial firms have initiated online distribution models that make it convenient for investors to invest, redeem and switch between different fund schemes. Mumbai-based iFast Financial & Abchlor Investments and Chennai-based Wealth India, for example, have launched mutual trading platforms for investors like fundsupermart.co.in, investonline.in and fundsindia.com catering to mutual fund transactions. Says iFast Financial CEO Rajesh Krishnamoorthy: “The online platform makes it cheaper for investors to transact in mutual funds.”
Select banks have been offering such solutions for some time, but they restrict transactions to their net banking members only. HDFC Bank offers its net banking customers a facility to invest in various mutual funds. ICICI Bank also offers similar services through its online trading platform ICICI Direct.
THE ONLINE CHANNELS
|ICICI Direct||Rs 100*|
|HDFC net banking||Rs 400**|
|*per transaction, nil above a corpus of Rs 8 lakh|
The new online transaction sites, on the other hand, are open to members of different banks or individuals with multiple bank accounts. Currently, there are about 14 different banks to choose from. Says Abhinav Angirish, MD, Abchlor Investments: “We have received a significant number of enquiries in the last month.”
Banking websites usually have a small transaction or annual cost. For example, HDFC Bank charges a fee of Rs 100 per quarter, while offering investments in nearly all fund houses. Says Nitin Rao, Executive Vice President, Private Banking Group, HDFC Bank: “It has been a stable business with us for some time now and we have more than 2 lakh accounts.” On the other hand, ICICI Direct charges a flat fee of Rs 100 per transaction, irrespective of the investment amount. If your total investment corpus exceeds Rs 8 lakh, the transaction fees are waived.
Their newer financial competitors, however, don’t charge any account maintenance or opening charges or even a transaction fee. They earn revenues through a trail fee, ranging from 50 to 75 basis points of the corpus that’s paid out by the asset management company, and which falls under the regular expense charged by a fund house. Investors, however, have to register personal details and comply with regular knowyour-customer norms.
You can also switch your existing physical fund holdings online. If you have a large mutual fund corpus, then using the online platforms of banks may be a good option as the bank charges as a percentage of your corpus will be insignificant. However, for small and new investors, the new MF transaction sites will help save a bundle. If you are a do-it-yourself investor, that’s a major plus.