Why Direct Plans of Mutual Funds Matter More in Falling Markets?

Markets are down 10% from its highs. And one question bothering everyone is should you hold or redeem? There seems to be reasonable consensus that it might be tough for the markets to repeat spectacular returns of 2017. Any advisor worth his salt will tell you that these are necessary blips in markets and over a long time period one should continue to expect a CAGR of 12-15% from equity funds. But its perhaps time to look beyond these occasional corrections. Don't sweat the small stuff - rather put yourself in a winning position first and get the process right. So now that the markets are down, your gains are down, what can you do to still get MORE from your investments?

Ensure you are invested in the right TYPE of scheme

Wise investors who have done well, say that its good to ride bull markets; however its equally important to manage your finances well in tougher markets. One simple way to boost your returns in low-return market environment is to move your Mutual fund portfolios to DIRECT PLANS - why? Because it saves 1-1.5% of your invested value every year (details below in the section "What are Direct Plans") which would have gone to your distributor if you continue with regular plans of same schemes. Moreover, because of a beautiful concept called compounding, it makes an even bigger difference to your long-term portfolios. Even in falling markets, direct plans will fall 1-1.5% lesser than the regular plans and give you added cushion.


Select the right Advisor/Platform

Moneyfront.in is a platform which not just offers Direct Plans of Mutual Funds but also offers unbiased advisory. Moneyfront is a registered InvestmentAdvisor with SEBI. It helps you a) invest online in DIRECT plans of Mutual Funds without any paperwork, b) lets you SWITCH your regular plans to DIRECT and save commissions from day 1, and c) provides genuinely unbiased advisory basis objective parameters. This is possible as they don't earn in-built hidden commissions (trail fees) from fund houses and hence can offer schemes solely basis merit.

What are DIRECT plans and how can one invest in them ?

A normal equity fund will have an expense ratio of 2.5% every year under the regular plan but the same equity fund will have an expense r atio of 1.25% under the direct option. This expense difference of 1.25% can be the difference between a good and a great life in the long-term. Regular plans have higher expense ratios because this 1.25% is the annual commission paid to distributors or bankers. And this difference hits an investor's return not once but every year. This 1.25% gets added back to your investments in direct plans and the compounding effect of which can make a big difference to when you achieve your financial goals. Table below clearly shows that this 1.25% saved annually can lead to a saving of over 1Cr in 25 years assuming your schemes are delivering 15% annualised returns.

Is Investing in DIRECT Plans time consuming?

Today a lot of investors are not aware that they can achieve better returns and reach their financial goals faster with the advent of new age technology platforms like www.moneyfront.in which facilitate investments in direct plans across fund houses.Not just fresh investment, Moneyfront also helps investors switch their existing regular plans to Direct plans with a seamless 3-click process. Few unique propositions which Moneyfront offers to its clients are:

• 100% paperless experience
• Simplified investment and switch process across 24 fund houses
• Model portfolios with Goal based Financial Planning
• Functionality to set up Systematic Transfer and Withdrawal Plans (STP/SWP)
• E-Mandate for setting up SIPs
• Account for NR clients and Minors
• Family portfolios under one login
• Facility of Joint accounts
• Variety of portfolio reports which can be customised
• Portfolio analytics and comprehensive research
• Gain/loss reports for financial years

Over and above all this, Moneyfrontlets you transact on the go - its Android App has literally put the process of tracking the portfolios and transacting on the fingertips of investors. Moneyfront is also launching its iOS app in the month of April.

What about the existing investments in Regular Plans?

Investors can easily switch existing regular plans investments to Direct plans in just 3 steps. They have to register with the platform and upload their existing portfolios in a pre-defined format. Moneyfront then provides an analysis of the overall portfolio along with a bifurcation of short-term and long-term units across Equity and Debt holdings. Investors can make informed decisions to switch their holdings from regular plans to direct plans seamlessly at the click of a button! Moneyfront also tells you how much you save by simply switching your portfolio from Regular to Direct. This process is 100% paperless and completely online, giving the investors the comfort of switching their portfolio anytime and anywhere.

What about personalised advice and guidance

Moneyfront has a dedicated team of experts to cater to each and every query of investors. From operational to technical, team is accessible 6 days a week through multiple channels like live chat, helpline numbers and query boards to answer investor concerns. Investors can also get their portfolios analysed by simply mailing it to the team and getting the right advice. Facility of skype reviews is also available.

Over and above that, Moneyfront has one of the most comprehensive algorithms to identify the best scheme for a client's portfolio based not just on past performance but also on the risk parameters and fund manager's ability to generate alpha in a portfolio. For investors who wish to plan for their financial goals, the platform uses a risk-weighted approach to recommend tailor-made portfolios which will help achieve defined financial goals. These goals can be tracked on a live-basis against the desired output.

Credentials

Having seen the success of its first offering i.e. DIRECT PLANS (Moneyfront is one of the largest online advisory platform for direct plans in India with over 10000 users who have routed over Rs. 370 Cr of investments through the platform), it has taken its core concept of providing best services to its clients without the fat commissions, to other products recently like corporate deposits, bonds, portfolio management scheme (PMS) investments. Investors willing to invest in such products can click on HNI Services option and get periodic information.

Sunil Taneja (professional sports commentator, associated with Start Sport for Pro Kabbadi League), one of the regular user on the platform opines, "Being a professional commentator, I realise the importance of going direct. Be it talking or investing, Direct is always the best choice. Moneyfront is not just a simple, seamless platform but they also have a great customer interface to help with personalised solutions. Team is just a call or a message away and always eager to help with personalised advice and portfolio review."

Mohit Gang, CoFounder and CEO of Moneyfront, quotes, "Moneyfront is at the forefront of right-by-the-client approach and prides itself on spreading financial awareness and disciplined investing amongst its clients."

For more information please visit - www.moneyfront.in