Everything You Need To Know About The Best Direct Mutual Funds In India
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22 December 2021
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22 December 2021Deepak is a beginner investor looking to obtain maximum returns from his mutual fund investment. Consequently, he plans to settle for a fund that comes with a lower expense ratio.
In which mutual fund should he invest?
Mutual fund houses in India offer both regular and direct plans. The primary difference is that the latter has a lower expense ratio than the former. Considering Deepak’s demand, he might want to settle for the best direct mutual funds.
These mutual funds do not charge commission fees or deduct any distributor’s fees. As a result, the Net Asset Value (NAV) of a fund’s direct plan is higher and separate from the regular plan’s NAV. For a particular mutual fund, both direct and regular plans have a common portfolio managed by the same fund manager.
Also Read – https://navi.com/blog/everything-about-equity-mutual-funds/
Table of contents
Top 10 Direct Mutual Funds to Invest in India
| Direct mutual funds | Features |
| Axis Bluechip Fund | -Assets Under Management (AUM): Rs. 33,966.75 Crore as of 31 October 2021 -Net Asset Value (NAV): Rs. 52.36 as of 29 October 2021 -5-year returns: 19.83% as of 31 October 2021 -Expense ratio: 0.47% |
| PPFAS Long Term Equity | -Assets Under Management (AUM): Rs. 17,219.55 Crore as of 31 October 2021 -Net Asset Value (NAV): Rs. 53.1438 as of 29 October 2021 -5-year returns: 23.79% as of 7 December 2021 -Expense ratio: 0.83% |
| HDFC Small Cap Fund | -Assets Under Management (AUM): Rs. 13,182.11 Crore as of 31 October 2021 -Net Asset Value (NAV): Rs. 80.398 as of 29 October 21 -5-year returns: 19.78% as of 29 October 2021 -Expense ratio: 0.83% |
| Franklin India Prima Fund | -Assets Under Management (AUM): Rs. 8083.29 Crore as of 31 October 2021 -Net Asset Value (NAV): Rs. 1,644.2771 as of 7 December 2021 -5-year returns: 15.40% as of 7 December 2021 -Expense ratio: 1.11% |
| Navi Long Term Advantage Fund Direct Growth (ELSS) | -Assets Under Management (AUM): Rs. 69.62 Crore as of 7 December 2021 -Net Asset Value (NAV): Rs. 22.626 as of 7 December 2021 -5-year returns: 15.41% as of 7 December 2021 -Expense ratio: 0.38% |
| Axis Long Term Equity | -Assets Under Management (AUM): Rs. 34,234.74 Crore as of 31 October 2021 -Net Asset Value (NAV): Rs. 82.6397 as of 29 October 2021 -5-year returns: 18.54% as of 31 October 2021 -Expense ratio: 0.74% |
| ICICI Prudential Bluechip Fund | -Assets Under Management (AUM): Rs. 31,081.90 Crore as of 31 October 2021 -Net Asset Value (NAV): Rs.65.95 as of 29 October 2021 -5-year returns: 15.34% as of 29 October 2021 -Expense ratio: 1.09% |
| SBI Magnum MultiCap Fund Direct-Growth | -Assets Under Management (AUM): Rs. 15,464.41 Crores as of 31 October 2021 -Net Asset Value (NAV): Rs. 83.2191 as of November 2021 -5-year returns: 16.03% as of November 2021 -Expense ratio: 0.86% |
| Aditya Birla Sun Life Tax Relief 96 Direct | -Assets Under Management (AUM): Rs. 14647.00 Crore as of November 2021 -Net Asset Value (NAV): Rs. 45.87 as of November 2021 -5-year returns: 14.51% as of 7 December 2021 -Expense ratio: 0.91% |
| L&T India Value Fund Direct-Growth | -Assets Under Management (AUM): Rs. 8,009.42 Crore as of 31 October 2021 -Net Asset Value (NAV): Rs. 62.897 as of 29 October 2021 -5-year returns: 15.35% as of 29 October 2021 -Expense ratio: 0.86% |
Why Should You Invest in the Best Direct Mutual Funds?
Find out the lucrative benefits of investing in direct mutual funds:
- Direct plans come with a low expense ratio as there is no involvement of a distributor.
- One can save the distribution fees paid to an agent as it gets added to the scheme’s returns.
- Owing to the lower expense ratio of the direct plan, one can expect higher returns in the long run. The returns on the investments keep on compounding over the years.
- It reduces the scope of conflicts of interest as individuals invest in this plan directly without the help of a distributor or agent.
In this regard, you can invest in Navi Long Term Advantage Fund Direct Growth (ELSS) from Navi. A lock-in period of 3 years allows you to save taxes, and its diversified portfolio curtails risk while providing enough equity exposure. You can invest in Navi’s mutual funds through popular aggregator sites like Groww, Paytm Money, Zerodha etc., to get better returns than other traditional options.
Also Read – https://navi.com/blog/all-about-sectoral-mutual-funds/
Who Should Invest in Direct Mutual Funds?
- Individuals who prefer investing in mutual funds without the involvement of a distributor or agent might find this option a desirable one. This means an investor who likes to make decisions regarding funds or schemes might prefer this investment.
- Investors well-versed in mutual funds might find it easier to settle for the best direct mutual funds.
How to Select the Best Direct Mutual Funds for 2021?
- Factor in the investment objective or goal.
- Measure your risk appetite.
- Check the past performance of the fund you choose to invest in.
- Consider the AUM (Assets Under Management) and costs associated with the mutual fund, such as expense ratio, commission fees etc.
- Find out whether the fund is directly or passively managed.
Final Word
You can invest in direct mutual funds through different paths such as Asset Management Company, transfer agents such as Karvy, mutual fund transaction portal and Robo-advisers. Make sure to learn everything about the best direct mutual funds so that you can easily fulfil your investment goals.
Frequently Asked Questions
Ans: Yes, you can apply for a mutual fund direct plan offline by following these steps:
Obtain a physical application form and fill it out precisely.
Submit it at the investor service centre or to its registrar and transfer agent (RTA) or at the branch of the concerned mutual fund.
Ans: A direct plan requires an individual to invest in it directly by doing independent market research. Since an investor applies for this directly, the fund house charges no commission fee on your invested money. Thus, these plans come with a lower expense ratio.
Regular mutual fund plans involve getting recommendations from mutual fund distributors. Consequently, an indirect commission is applicable to the money you invest, which ultimately results in a higher expense ratio.
Ans: Generally, there are four types of risks associated with direct mutual fund investment:
Equity risk: Equity and hybrid funds invest in stocks of various companies whose price keeps fluctuating due to various market-related reasons. Such investments carry the risks associated with the stock market.
Credit risk: Individuals investing in debt funds are exposed to this risk.
Interest rate risk: Investments in debt instruments involves this risk as the bond price changes with their trade.
Inflation risk: Inflation is the general increase in the prices of various goods and services and can interfere with your investment goals.
Ans: Here are the features of direct mutual funds:
Investors do not have to depend on a third party to apply for this mutual fund.
One can invest in this fund in both online and offline modes.
Fund houses do not impose a distributor fee resulting in a lower expense ratio.
One can apply to this fund independently.
Ans: To know about the type of plan you have invested in, you might want to check the account statements of all the mutual fund schemes. You can obtain this statement from the respective AMC, or you can get a consolidated statement from Karvy. If you have invested in a direct plan, your mutual fund scheme name will include the word “Direct”.
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Disclaimer: Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
