[vinit.merchant]

With the early exposure to equity markets (my first job at the age of 19 being an operator on the NSE bolt at a broker), I am probably a very unlikely candidate to ask this question at my current age. Wife quitting job for kids + home loan happening simultaneously, and here I am @ 38, without anything invested in MF. But better late than never.

I want to add 5% of my salary as SIP. I have shortlisted some funds to put this in

Mirae Asset India fund
Mirae Hybrid fund
Mirae emerging bluechip
Kotak Select Focus
ABSL Pure Value fund

I am slightly biased towards Mirae as I think it is a very good fund house. Fund selection is quite easy as they have 2 pure equity funds (1 multicap and 1 mid/small), 1 hybrid, 1 debt and 2 thematic (which I do not like the idea of). This as against other fund houses which have the number of schemes in double digit in each category.
Also a small lumpsump put in April in Mirae Aset India fund is already giving 11% returns. But this is where I would need members opinions.

My plan is to increase the contribution every year and continue the SIP as long as I can, and withdraw only in case of big unforeseen requirements.

I already have an account in MFU and will be going the direct way.

[vampire]

I have noticed a lot people(including me) invest in mutul funds without any plans. First a plan needs to be made with regards to our financial goals.
For example short term goals - this car, that vacation etc, which comes with in a period of 2-5 years and then assuming a decent enough XIRR of 12-20% investments may be done.
Long term goals - primarily retirement, children education etc. These returns may be assumed at a higher ROR of 18-25 % considering time invested is 10-15 years.
Now with regards to selction of portfolio there needs to be an understanding that the exposure of the portfolio to risk should be inversely related to ones age .

Quite simply - 30-40 yrs of age 70% high risk 30% low risk, 40-50 yrs of age a fifty fifty percent and 50 years plus a 30% exposure to risk and 70% at low risks.


Funds selection - people to limit themselves to selection of fund based on large mid and low cap, not to forget the debt and hybrid. But these days sectoral funds are performing quite good, say for example any infrastructure based fund, a consumer fund, natural resources funds and the pharma funds.


Most importantly there should not any portfolio overlap. Its quite common to see people buying funds with 50-60% portfolio overlapping.



I firmly believe in the fact that mutualfunds should be restructured/reallocated every 2-3 years depending on the performance of funds.

[Thilak29]

What is the business model of these brokers who offer MF without brokerage ?

[JMaruru]

Originally Posted by Thilak29

What is the business model of these brokers who offer MF without brokerage ?

If I have to keep it simple : 'Trailing Commission'.

[carbookie]

Originally Posted by JMaruru

If I have to keep it simple : 'Trailing Commission'.

There are many that sell direct plans...
They don't get a upfront commission or trailing commission on your investments...

Examples of such platforms are kuvera, mfu, Paytm money

[thoma]

Originally Posted by JMaruru

If I have to keep it simple : 'Trailing Commission'.

I've been trying to know more about this, but still not clear. Is it collected directly from the investor or does the fund house pay the broker and include it in the expense which finally reflects in the NAV?

[Weathered]

ETMONEY is now offering direct mutual funds at zero commission on its platform for a limited period.

"ETMONEY is offering the service free as it is benefitting from its ability to operate on a low-cost model. We have kept our costs low because we are a mobile phone-based financial services platform and we can pass on this benefit to the customers in the form of zero fees for investments,” ETMONEY chief executive Mukesh Kalra said.

Find out more: https://goo.gl/ZixFnW

[vampire]

Originally Posted by carbookie

There are many that sell direct plans...
They don't get a upfront commission or trailing commission on your investments...

Examples of such platforms are kuvera, mfu, Paytm money

Coin by zerodha has become one of the largest direct MF selling platforms.


Piggy is also worthwhile, one of the first MFU's.

[srsrini]

Originally Posted by Thilak29

What is the business model of these brokers who offer MF without brokerage ?

Others have mentioned trails... and named some platforms. I am responding to all of them.


1. Direct funds don't have any upfront or trail commissions. And once you put the ARN as DIRECT, there is no way for the fund house to find out how the investment was made.


2. Some online platforms actually have a SEBI RIA. (I know that at least Paytm money does.) They may be tagging the investments with that. Still this may not have any direct monetary benefits. For getting the RIA license, you have to give an affirmation that you would earn only from fees charged to the client and nothing from the investments actually made.


3. MFU is by the fund houses. It has been developed as an 'always free' platform. They also stick to just processing of investments - no fancy tools for reporting, let alone selection. They also cater to offline markets through PoPs. In fact, the online interface is practically a translation of the paper forms! (Disclaimer: I have been MFU almost exclusively for the last 3 years.)


4. Personally I liked the earlier model from Zerodha - free for 'looking' and a small fee if you get serious. That would be a scaleable model. But due to Paytm, everybody would go to zero fees.


5. FWIW, there are interviews from Kuvera folks on how they plan to make money.



6. As you can expect, freefincal has an article on this topic:https://freefincal.com/free-direct-mutual-fund-portals/



7. An unhealthy development recently has been this: AMCs reduce the Commissions (charged only on regular funds) and increase the management fees (charged for all funds). This shows up in regular plan TERs staying flat and direct plan TERs increasing. Your guess is as good as mine on what the extra management fees would be used for.


8. While SEBI has capped commissions on mutual funds, it does not (and can not) say anything about what an AMC as a company can give to the distributor/online portal as a company.





So what should one do if they are concerned about this? I don't know, but I can share what I do (and have been doing for > 5 years)

• Use DIY and consultation with fee-only planners to select my mutual funds (I also invest in stocks, again some DIY and more Equitymaster)
• Use perfios to keep track of all the investments (and the rest of the financial records too) I particularly love the 'Equity exposure' report that tells me my exposure (in rupees) to a particular stock via mutual funds and direct equity
• Use MFU for transactions (Used AMC sites earlier)

Hope this helps a bit...

[govigov]

Originally Posted by aadya

In case of STP or frequent transactions between liquid funds and savings account, slightly complicated STCG calculation needs to be done. Nothing impossible with all the computing power available with us. But liquid funds are certainly not tax inefficient in comparison with savings account.

Thank you, aadya. That clears a lot of doubts for me.

[Thilak29]

Originally Posted by srsrini

[*]Use MFU for transactions (Used AMC site s earlier)[/list]

I use Coin at the moment, should things go uneasy way sometime in future, do I have the option of porting my SIP to MFU or any other broker without seeking redemption? I ask because I tried to add my SBI MF folio (subscribed under coin) in SBI MF site but it is not accepting it stating PAN is incorrect.

[aadya]

Originally Posted by Thilak29

I use Coin at the moment, should things go uneasy way sometime in future, do I have the option of porting my SIP to MFU or any other broker without seeking redemption? I ask because I tried to add my SBI MF folio (subscribed under coin) in SBI MF site but it is not accepting it stating PAN is incorrect.

SIPs cannot be transferred from one platform to another platform, as it requires a fresh debit mandate from bank or Payezz registration(in MFU). But it is easier to stop the current SIPs in COIN and start new SIPs in MFU or AMC platforms.

[srsrini]

Originally Posted by Thilak29

I use Coin at the moment, should things go uneasy way sometime in future, do I have the option of porting my SIP to MFU or any other broker without seeking redemption? I ask because I tried to add my SBI MF folio (subscribed under coin) in SBI MF site but it is not accepting it stating PAN is incorrect.

First off, incorrect PAN is definitely an issue to look into. Please see if you can get the full statement from the AMC or zerodha; you may have to call SBI to get this. This would also give you the confidence in the para below.



For the main question, you can always set up future SIPs using any platform of your choice. Your current investments are always in your name and you would have access to them via the AMC and MFU.

[DigitalOne]

Originally Posted by srsrini

I don't know, but I can share what I do (and have been doing for > 5 years)

Thanks for sharing.

This is I how I have been managing my MF portfolio (>10 years, ~ 40L portfolio):
1. Only few fund houses - FT, HDFC, Birla Sunlife, ICICI, Reliance, Quantum, Motilal Oswal.

2. Mostly SIPs only, rarely lumpsum.

3. All direct investments. All investments via individual fund house websites only

4. I have a Google doc, having my folio numbers, user id and masked passwords (no actual passwords).

5. I check portfolio statements only once a month through the NSDL-CAS statement.

Disadvantage with this approach is to deal with a couple of primitive fund sites like Birla Sunlife.

[Shankyz]

Originally Posted by DigitalOne

Thanks for sharing.

masked passwords (no actual passwords).

I am not sure what you mean by masked passwords, can you elaborate please.

Also that brings up another topic, which password management tool do you guys use to manage all the passwords across so many sites?