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How to switch from an ordinary to a direct mutual fund plan online
Avoid charges and maximize long-term returns—here's the way to do it online without trouble.
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Why opt for a direct plan
Ordinary mutual fund schemes come with distributor charges, which are included in the cost ratio and reduce your returns over time. Direct plans, on the other hand, are purchased directly from the AMC (Asset Management Company) and carry no such charges. While the fund portfolio remains the same, the cost structure is lower, leading to better compounding over the long term. If you’re confident in choosing funds yourself, switching to direct plans can significantly enhance your gains.
Ordinary mutual fund schemes come with distributor charges, which are included in the cost ratio and reduce your returns over time. Direct plans, on the other hand, are purchased directly from the AMC (Asset Management Company) and carry no such charges. While the fund portfolio remains the same, the cost structure is lower, leading to better compounding over the long term. If you’re confident in choosing funds yourself, switching to direct plans can significantly enhance your gains.
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Check lock-in period and exit load first
Before you switch, ensure that you are still about to exit the fund. If you have tax-saving ELSS funds, they have a 3-year locked-in period. For other mutual funds, ensure that your holding period falls within the exit load window—typically one year for equity funds. If you switch before the end of the same, charges may be applicable. Switching is also counted as re-investment and redemption, which can have tax implications.
Before you switch, ensure that you are still about to exit the fund. If you have tax-saving ELSS funds, they have a 3-year locked-in period. For other mutual funds, ensure that your holding period falls within the exit load window—typically one year for equity funds. If you switch before the end of the same, charges may be applicable. Switching is also counted as re-investment and redemption, which can have tax implications.
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How to navigate through AMC websites
The simplest way to switch your holdings is through the online website of the mutual fund company. Log in or sign up with your PAN and mobile number/email. Go to your current folio, choose the scheme from which you want to switch, choose 'Switch' and then choose the direct plan of the same scheme. You will need to select the amount or units you want to switch and authorize the transaction with an OTP.
The simplest way to switch your holdings is through the online website of the mutual fund company. Log in or sign up with your PAN and mobile number/email. Go to your current folio, choose the scheme from which you want to switch, choose 'Switch' and then choose the direct plan of the same scheme. You will need to select the amount or units you want to switch and authorize the transaction with an OTP.
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Use R&T platforms like CAMS or KFintech
If you have holdings in different AMCs, registrar from platforms like CAMS (www.camsonline.com) and KFintech (www.kfintech.com) to make a smooth transition. After logging in, you can view all your folios maintained by the registrar and request a direct plan transition in schemes where it is permitted. These websites also maintain your previous transactions, so record-keeping becomes a breeze. Do remember, however, that not all AMCs might use the same registrar.
If you have holdings in different AMCs, registrar from platforms like CAMS (www.camsonline.com) and KFintech (www.kfintech.com) to make a smooth transition. After logging in, you can view all your folios maintained by the registrar and request a direct plan transition in schemes where it is permitted. These websites also maintain your previous transactions, so record-keeping becomes a breeze. Do remember, however, that not all AMCs might use the same registrar.
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Use R&T platforms like CAMS or KFintech
If you have holdings in different AMCs, registrar from platforms like CAMS (www.camsonline.com) and KFintech (www.kfintech.com) to make a smooth transition. After logging in, you can view all your folios maintained by the registrar and request a direct plan transition in schemes where it is permitted. These websites also maintain your previous transactions, so record-keeping becomes a breeze. Do remember, however, that not all AMCs might use the same registrar.
If you have holdings in different AMCs, registrar from platforms like CAMS (www.camsonline.com) and KFintech (www.kfintech.com) to make a smooth transition. After logging in, you can view all your folios maintained by the registrar and request a direct plan transition in schemes where it is permitted. These websites also maintain your previous transactions, so record-keeping becomes a breeze. Do remember, however, that not all AMCs might use the same registrar.
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Switch over but stay invested
Converting to a direct mutual fund scheme is one-time effort that will increase your returns year after year. Just make sure you search for exit loads, tax, and the transaction is properly recorded in your account. You need not shift your fund—only the way you are accessing it. Being consistent with your SIPs while eliminating unnecessary expenses is advisable for long-term investors.
Converting to a direct mutual fund scheme is one-time effort that will increase your returns year after year. Just make sure you search for exit loads, tax, and the transaction is properly recorded in your account. You need not shift your fund—only the way you are accessing it. Being consistent with your SIPs while eliminating unnecessary expenses is advisable for long-term investors.
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