How to use MF Utility to Invest Online in Mutual Funds
You want to invest in the stock market but lack the expertise yet. The immediate preference will be by doing so through some experts like brokers. Now say that you have been investing in markets for nearly seven years, and to date, you have kept doing so through the broker. But unlike then, now you have a reasonably good idea to take the investments into your own hands and save on the brokerage payments. The mutual fund utility allows you to invest in direct plans of mutual funds where you get to keep on the expense ratio of the mutual fund scheme. This saving would help you get some additional profits on your investment in the mutual funds. How? Let's understand.
What is mutual fund utility?
The Association of Mutual Funds in India (AMFI) has launched MF Utility (MFU), an innovative "Shared Services" initiative by the Mutual Fund industry that acts as a "Transaction Aggregation Portal". As a Mutual Fund customer, you can transact in multiple schemes across Mutual Funds using a single form/payment. It connects Mutual Fund customers to Registrars and Transfer Agents (RTAs), Banks, Payment Gateways (PGs), Asset Management Companies (AMCs), and KYC Registration Agencies (KRAs) through a single form/payment. It allows online transaction submission in multiple schemes across Mutual Funds. With MF Utility, you can invest in numerous mutual fund schemes' direct plans across multiple fund houses in a single transaction.
But you might wonder, how does a direct plan make mutual fund investment better?
It may be helpful to understand that there are two types of plans available for each mutual fund scheme (direct and regular plans). You can identify whether the fund is direct or regular from the name of the scheme. The words direct or regular would be mentioned in the title of the scheme. You can invest directly with the fund house in a direct plan instead of going through a distributor. As a result, you save on the commission payments that would otherwise be made to a distributor out of the investment you make in a regular plan. Because the commission amount is not built into the scheme, direct plans have a lower expense ratio (charging 0.5-1.0 percent less). An expense ratio is an amount that mutual funds charge as a percentage of their assets under management each year. Because of the compounding effect, a higher expense ratio means you pay more fees per year to the mutual fund, which ultimately eats into your returns. The direct plan of the mutual fund eliminates this to a certain extent.
Mutual fund utility gives you an option to save on the expense ratio. So now that we know the benefits let's understand how to use the MF utility platform.
How to use mutual fund utility?
- Investing through mutual fund utility requires a Common Account Number (CAN). MFU issues a unique identifier known as a CAN. You must fill out a CAN registration form and submit it to any MF Utility India arm, a distributor who has signed up with MFUI, or a participating AMC branch to be eligible for CAN. You can register for CAN online as well.
- After submitting the CAN Registration form, you will receive an SMS and an email to your registered mobile phone and email address confirming the CAN allotted to you. This could take up to a week to complete.
- You can then sign up for online access through their portal - https://www.mfuonline.com/ - once you've created your CAN. For the account, you'll need to create a User ID and a password.
- After you've obtained the necessary login credentials, go to MFUOnline.com and complete the transactions. In a single click, you can invest in a single transaction or multiple transactions. You can pay for multiple MF schemes across multiple AMC fund houses with a single payment.
MF Utility is a centralised mutual fund distribution platform that will allow customers, distributors, and financial advisers to transact in schemes offered by different fund houses on a single platform. However, before you begin investing through MFU Online, make sure you select the right MF schemes based on their long-term consistency. The right scheme will go a long way in determining the final corpus amount for DIY investors in the long run.
ICICI Securities Ltd.( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Mumbai - 400025, India, Tel No : 022 - 2288 2460, 022 - 2288 2470. AMFI Regn. No.: ARN-0845. We are distributors for Mutual funds and all disputes with respect to the distribution activity would not have access to Exchange investor redressal or Arbitration mechanism.
Please note that Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. I-Sec does not assure that the fund's objective will be achieved. Please note. NAV of the schemes may go up or down depending upon the factors and forces affecting the securities markets. Information mentioned herein is not necessarily indicative of future results and may not necessarily provide a basis for comparison with other investments. Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
The information provided is not intended to be used by investors as the sole basis for investment decisions, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific investor.The contents herein above shall not be considered as an invitation or persuasion to trade or invest. Investors should make independent judgment with regard suitability, profitability, and fitness of any product or service offered herein above. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon.