The charges a person pays on a Mutual Fund investment depend on the way one purchases the Mutual fund. Broadly there are three ways:
1. Investing Directly with the AMC (Asset Management Company or Mutual Fund Company) without an Adviser. To do this you need to complete a SEBI KYC and then open a folio with the Mutual fund company and invest in the DIRECT version of the fund. Since you do not have an adviser you are on your own in opening the account and in choosing funds. This is the cheapest route and it is a Do It Yourself Route meant only for those who are very comfortable with Mutual fund investments, such as corporates. Direct equity funds usually have an expense of about 2%.
2. Investing Directly with an AMC with an Advisor. This is the model we follow at SphereGreen. This investment is in a REGULAR Fund and is about 0.5% more expensive than a DIRECT fund, but you get our help in opening folios and choosing funds and in managing your money over a long period of time. This is best suited for new investors in Mutual Funds.
3. Investing through a bank or stock broker. Usually banks or brokers act as advisers but do not provide any advise on funds. Investing through them is the same as investing with an adviser, so you pay for an adviser, in this case the bank, but you do not get much advice. Even more, some banks and brokers put you onto Mutual Funds through their wealth management arms, and that is extremely expensive. Investing through wealth management is the most expensive way to buy Mutual Funds because it can cost as much as 3% more than REGULAR FUNDS, and in our experience it provides little extra benefit.
We believe Investing Directly with an AMC, but in a REGULAR fund with us as an adviser, is the best way to invest in Mutual Funds for a new investor.
1. Investing Directly with the AMC (Asset Management Company or Mutual Fund Company) without an Adviser. To do this you need to complete a SEBI KYC and then open a folio with the Mutual fund company and invest in the DIRECT version of the fund. Since you do not have an adviser you are on your own in opening the account and in choosing funds. This is the cheapest route and it is a Do It Yourself Route meant only for those who are very comfortable with Mutual fund investments, such as corporates. Direct equity funds usually have an expense of about 2%.
2. Investing Directly with an AMC with an Advisor. This is the model we follow at SphereGreen. This investment is in a REGULAR Fund and is about 0.5% more expensive than a DIRECT fund, but you get our help in opening folios and choosing funds and in managing your money over a long period of time. This is best suited for new investors in Mutual Funds.
3. Investing through a bank or stock broker. Usually banks or brokers act as advisers but do not provide any advise on funds. Investing through them is the same as investing with an adviser, so you pay for an adviser, in this case the bank, but you do not get much advice. Even more, some banks and brokers put you onto Mutual Funds through their wealth management arms, and that is extremely expensive. Investing through wealth management is the most expensive way to buy Mutual Funds because it can cost as much as 3% more than REGULAR FUNDS, and in our experience it provides little extra benefit.
We believe Investing Directly with an AMC, but in a REGULAR fund with us as an adviser, is the best way to invest in Mutual Funds for a new investor.
No comments:
Post a Comment