Mutual funds are open to a wide range of investors including Resident Individuals, NRIs, PIOs, HUFs, Companies, Partnership Firms, Trusts, Cooperative Societies, Banking and Non-Banking Financial Institutions, registered FIIs, QFIs etc. This is not an exhaustive list but represents the more commonly known types of investors in mutual funds in India.
How to invest in mutual funds
Mutual funds are made easily accessible to investors. Applications can be made in the following ways.
Agents: These are professionals who are trained to reach out to customers to provide information on the various funds provided by a company. They help process applications and deal with related issues e.g. redemption, cancellation, transfer of units and other dealings with the company. Agent commissions, which normally range up to 6%, are added on to the purchase price of fund units.
Direct: Customers can circumvent agents and apply to a scheme themselves. They can do this by visiting the nearest office of the mutual fund company or by going online. Forms can be availed and submitted at the appropriate office or downloaded from the company website and submitted at the office. Alternatively, applications can be processed online.
Applying for Mutual Funds Online
Online transactions are becoming increasingly popular for many reasons, as mentioned below.
Convenience: Schemes can be applied from the comfort of one’s own office or home.
Easy comparison: Besides company websites, there are a number of online financial services providers which act as single-point portals for viewing and comparing funds and schemes from multiple companies.
Affordable: By circumventing agents, investments are cheaper since commissions aren’t added on to purchase costs.
Independence: All required information, including brochures and other material, are provided online for easy perusal. This lets investors avoid misselling by agents and make informed, independent decisions.