Well Sebi says now you can buy a mutual fund from a stock broker. Of course Sebi and Amfi have added (very sternly) that brokers who sell mutual funds should also pass the Sebi exam (wrongly called the Amfi exam).

This is hilarious at best. There are banks where in one city there would be one or two people who have passed the exam and all applications are routed through these guys immaterial of who actually sells (oops Sebi). Similarly for insurance selling by “IRDA” exam passed people. Currently passing the exam is a joke. LOL or ROFL.

You can buy through a bank (Hdfc bank charges are nil for an sip) and Citibank and Hsbc are at the other end (they charge a %age of the amount invested). The bank will give u the necessary support of filling up the form, banking it etc. Surely like you open a savings bank account you will soon be allowed to open a “Mutual fund account” where you can buy, sell, do sip,…just like opening a Fd, recurring deposit etc. It is just a click away or it is already there and I have not seen it.

You can go directly to the website of the mutual fund….

You can ask your friendly neighbourhood mutual fund distributor and ask him to do it for you. Many are eager to still do it, some of them will disappear.

You can go to tested and untested websites who claim to be aggregating applications.

You can go to a broker, buy a mutual fund and hold it in a demat mode. This is perhaps the stupidest way of buying a piece of asset which cannot be borrowed against, loaned, gifted, transferred….! Am not sure but when Mastershares and MasterGain schemes of UTI were launched they were in ‘physical form’. Then Mr. Prasad (S V Prasad I think – he spent a long time with Birla Mutual Fund) came up with a simple idea to issue a ‘holding letter’ rather than a value document. This is like having a bank statement instead of the underlying cash. Losing a certificate meant a lot of headache. Losing a statement does not matter at all.

Imagine holding a portfolio of Rs. 1 crore in ‘demat’ form – pay a %age of that as fee…I am impressed by what people can do! God bless them.

  1. Funny that the retail investor will pay 0.5% brokerage, .0002% demat entry charges (while buying), demat processing charges while exiting – all on the current aum rather than hold it in a statement form. If the amc was issuing share certificates (and it had a commercial value) dematting is sensible. It is much better to memorise one folio number. My families Mf portfolio which runs into 8 digits is in 5 funds – which means five folios. Imagine my demat charges. Fantastic money making ideas for brokers – who anyway only trade the index!

  2. There are pros and cons both. On one side we extoll the benefits of ETFs over similar MFs – aren’t those to be bought through brokers and kept in demat (ETFs have lower management fees than comparable MF)! Also there is no “ban” on regular channel of sales agents right, only the upfront fee was made optional. But then there are opinions that in future, “investors” will slowly have to start paying agents for their service, then isn’t that similar to brokerage of a broker! At least brokerage and demat charges are transparent, are the advisor fees and AMC fees!! Brokers like HDFC charge 0.5% on broking for delivery, but there are other who charge anywhere between 0.1 to 0.5 for delivery. It is market and more choices does not mean “stupidity”. Smart customers will opt for best value for money as per their needs. Those who are conned, those will be conned by sales agents, banks, brokers and regulators alike!

  3. Hi, I am interested in buying MFs, but I am staying out of India, I have a icici demat acct mapped to my icici bank acct. unfortuantely, I don t have online trading acct details. Can you tell me a method to buy MFs online or some other non-paper method?

    thanks, Vinay.

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