How Can I Invest in Mutual Funds in India?

How Can I Invest in Mutual Funds in India

An investment in mutual funds can be made both offline and online. The following is the process for investing in a mutual fund scheme:

Step 1: If you are investing through the offline mode, you can visit either an asset management company (AMC) branch, the nearby Karvy/CAMS office or a registered mutual fund distributor/broker. If you want to go via the online mode, you can visit the website of either an AMC (for both direct and regular mutual fund schemes) but the option of funds available to you will be limited. Alternately you can log on to the website of a registered mutual fund distributor such as Paisabazaar and invest in leading mutual funds in India across top fund houses.   

Step 2: After this, you need to complete the KYC (Know Your Customer) formalities as per SEBI guidelines.

Step 3: The next step is completion of In-Person Verification (IPV). IPV can be completed by either by visiting the nearby Karvy/CAMS office etc. or sending documents in paper/applicable digital format to the registered mutual fund intermediary.

Step 4: Select a mutual fund scheme on the basis of your investment time horizon, risk appetite, and other important factors. You can read more about how to select a mutual fund scheme here.

Step 5: Submit the mutual fund application form. This can be done after the completion of the IPV which usually takes 5-7 days. Along the application form, also submit the investment cheque amount. If you wish to invest via a SIP (Systematic Investment Plan), fill and submit the SIP form along with the application.

10 Most Popular Mutual Fund Houses in India

10 Most Popular Mutual Fund Houses in India

Below is a list of the 10 most popular mutual fund houses in India on the basis of their total assets under management (AUM) as of March 31, 2019.

S.No.	Name of Fund House	AUM (in Crore)
1	HDFC Mutual Fund	Rs. 3,42,525
2	ICICI Prudential Mutual Fund	Rs. 3,21,281
3	SBI Mutual Fund	Rs. 2,84,124
4	Aditya Birla Sun Life Mutual Fund	Rs. 2,46,696
5	Reliance Mutual Fund	Rs. 2,34,293
6	UTI Mutual Fund	Rs. 1,59,694
7	Kotak Mahindra Mutual Fund	Rs. 1,50,271
8	Franklin Templeton Mutual Fund	Rs. 1,19,933
9	Axis Mutual Fund	Rs. 89,768
10	DSP Mutual Fund	Rs. 78,363

(Data as on March 31, 2019; Source: AMFI)

Benefits of Mutual Fund Investments

The following are the benefits of investing in mutual funds:

Flexible Investment AmountsA mutual fund investment can be started with an amount as low as Rs. 500 while there is no limit on the maximum amount you can invest. But do keep in mind that in case of ELSS investments, you get the tax benefit only up to the Rs. 1.5 lakh 80C limit in a financial year.

Professional Management of FundsWith mutual fund, an investor can benefit from the professional management of his/her funds by an expert fund manager. Fund houses charge a nominal fee for the administration and management of a mutual fund scheme called Expense Ratio. The expense ratio of a mutual fund generally ranges between 0.5% to 1.5% and cannot exceed the limit of 2.5% set by SEBI. Fund houses always mention the returns generated by a mutual fund scheme after deducting the applicable expense ratio.

High ReturnsMutual funds offer long term returns that range from 7% (in lowest risk carrying liquid funds) and 15% or higher in case of most equity funds over a 5 year period. These inflation beating returns provided by mutual funds are one of the key reasons why many are choosing these market-linked investments over fixed income instruments such as fixed deposits.

DiversificationMutual funds allow investors to access a wide and diversified investment portfolio that can include equities of varying market capitalisations as well as debt and money market instruments for an investment amount which can be as low as Rs. 500. The diversified investment portfolio allows a mutual fund to provide an unmatched balance between risk and return.

Systematic Investment OptionA systematic investment plan (SIP) is a method of investing in mutual funds which allows investors to invest a fixed sum in a mutual fund scheme at predetermined intervals (daily, weekly, monthly, bi-annual or annual). SIP investments reduce the potential financial risk associated with a lump sum investment. It also enables an investor to increase/decrease the investment in line with the current financial situation of the investor.

Tax BenefitAn Equity Linked Savings Scheme (ELSS) is a type of mutual fund which helps an investor in getting a tax benefit in addition to the above-mentioned benefits. An ELSS comes with a lock-in period of 3 years and every ELSS investment qualifies for a tax deduction of up to Rs. 1.5 lakh under Section 80C of the Income Tax Act. Even in the case of other (non-ELSS) equity schemes, capital gains from unit redemption up to Rs. 1 lakh in a fiscal are exempt from tax.