Why invest in direct mutual funds on Coin?

The funds will be debited from your trading account.

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Yes, your mutual fund units are held in demat form. When you redeem your mutual fund units you incur a DP charge of Rs 5.5.

smallcases similar to a mutual fund is a basket of stocks, but unlike mutual funds, there are no AMCs, fund managers and other ensuring charges are minimal in smallcase.

Just one thing which I am unable to do get hold of is-

consider there is a 1% difference in expenses ratio of regular and direct MF’s, at what amount invested yearly be someone at profit by paying 600 i.e at what amount invested the extra 1% expenses ratio starts hurting me more than 600 rs a year ?

Assuming 1% upfront and 1% trail every year. At Rs 30000, you would have paid Rs 300 as upfront and Rs 300 in trail at end of the year. With us, after your Rs 25000, you would have started paying Rs 50/month. Also with mutual funds, you shouldn’t look at your investment value, but at the current value of investment which can keep going up.

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Understood direct mfs. But is this any different from buying a direct Mf in another online broker like ICICI Direct? Basically do i benefit monetarily by buying it from Zerodha instead of ICICIdirect?

ICICI and 99.9% of them out there are distributors. They are not selling direct MF. Check this link, ICICI is one of the biggest distributors in India. They earn over Rs 300 crores every year as commission from fund houses.

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Nicely explained!! I have a question though. Few online distributors offer different types of SIP investment like Flexi SIP and Value Investment Plan(VIP) wherein an amount in a range is invested in MF depending on that month’s NAV. Will Coin offer these (or at least some of these) facilities?

Thanks.
Regards,
Saurabh

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HI Nithin,

One question.
On your above illustration , it seen there is a difference on NAV value. Where direct fund NAV is higher on any day.
So, I will be getting lower unit in direct fund compared to regular fund. It should some how adjust the higher expense ration. can you explain please.

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When one fund is charging more for managing your money, you expect low value of fund per unit of fund as compared to one which charges more.

If NAV of direct fund high this implies that if you invested same amount of money in both direct and regular funds, direct fund’s value will be higher than regular’s

Hello Sukanta,

NAV of the MF units will be different to explain the additional expenses loaded in case investment is made through distributor. I made an investment in DSP Black Rock’s T.I.G.E.R Fund initially through distributor and then Directly under the same folio. I checked the account statement dated 24-May-20017 and it mentions the following

  1. T.I.G.E.R Fund - Dir - G: NAV 90.143
  2. T.I.G.E.R Fund - Reg - G: NAV 88.130

Hope this explains!

Can you list the different types of charges involved while transacting mutual funds in demat form ?

This is the commission charged by my current distributor, IIFL: Commission PDF
And this is my mutual fund portfolio summary:

If I am investing ₹5500/month through SIP for 3 years, how much would I save using coin (accounting in ~₹900/year Zerodha charge - ₹300 AMC + ₹600 for MFs)?
Additionally, would I be able to track my MFs all in one convenient summary screen like IIFL provides?

On an average a saving of around 1% per year on your portfolio, this can be upto 1.5% on certain funds. We had done a math with assumptions as mentioned in the image below. If you hold your investments for a long term, this can be quite a bit.

That doesn’t answer any part of my query. I need:

  1. Numbers specific to my situation (as detailed in my previous post).
  2. Mutual fund summary screen similar to what IIFL provides, so that I can track all my MFs on one screen.

Please reply with appropriate considerations.
If I can have significant savings, I would most definitely shift my whole MF portfolio over to Zerodha-coin.

@BhushanDhamale Look at the expense ratio for each of these funds in both the direct and indirect mode.

For direct, you can check here and for regular here. The difference in expense ratio is the yearly saving you make.

Now use a compound interest calculator and mention the % return you expect. See the final return you make from the regular fund. Now add the difference in expense ratio to this expected return and see the final amount. The difference is your savings.

I will try to get a calculator done for this at our end.

Best,

There! I made it a little easier for you to calculate the savings.

I am a little unclear as to how to calculate the total savings, so, I’ll leave that up to you.

I would also like to know about the availability of the ‘Mutual Fund Portfolio Summary’.

Thank you. :slight_smile:

Of course portfolio summary is there. :slight_smile:

I am going to calculate savings on Principal where the expense ratio difference is highest, so you see savings on coin the most. ;)… use the same for others…

Regular fund, Rs 5000 every month for 20 years at 12% compounded, final amount is Rs 46.47lks

Direct fund, Rs 5000 every month for 20 years at 13.79% (1.79% as that is the extra return you make by going direct), final amount is Rs 57.84 lks. That is a whopping Rs 13lks more. It will be lot more if market returns are more or if you hold for longer.

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Thank you for the update Nithin :smiley:

Hi Nitin,

I bought a few direct funds on coin, 3-4 lac both equity and debt.
I am a little confused with another articles which my friend suggested that direct funds have lot of documentation
and we need to deal with direct funds and its lot of hassle to remember credentials and operate them.

But on coin i saw i could buy them and i see them in dashboard, is redeeming also from same portal or do we need to seperately contact fund houses to redeem them.

Situation is : What if i am no more around, and my wife has to deal with these investments. Can she just login to coin and redeem all of them or she has to mess around with paper work ?

Little confused, using zerodha from over 2 years now.
Please assist.

Abhishek

Your friend I am guessing is confused. That is the beautiful thing about investing in direct via demat mode. Absolutely no documentation. Yes, your wife can login tomorrow and redeem it, you can even transfer these MF to her demat account. Maybe you should convince your friend to read through this thread and invest on coin. :wink:

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