{"id":6816,"date":"2017-03-27T15:15:11","date_gmt":"2017-03-27T09:45:11","guid":{"rendered":"http:\/\/zerodha.com\/z-connect\/?p=6816"},"modified":"2024-02-02T14:44:49","modified_gmt":"2024-02-02T09:14:49","slug":"introducing-coin-our-direct-mutual-fund-platform","status":"publish","type":"post","link":"https:\/\/zerodha.com\/z-connect\/coin\/introducing-coin-our-direct-mutual-fund-platform","title":{"rendered":"Introducing Coin – our Direct Mutual Fund Platform"},"content":{"rendered":"

Investors,<\/p>\n

Mutual funds\u00a0today can be purchased in two ways – either through a distributor or directly from the AMC.<\/p>\n

Through a distributor<\/h4>\n
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When purchased this way, the distributor earns an upfront commission of upto 1.5% on your investment and a trail commission of up to 1.5% every year for as long as you are invested in the fund. Yes, that much! These commissions earned are the reason everyone from your bank to brokerage would be pushing you mutual fund ideas to invest in.<\/p>\n

I am guessing a lot of you would have known that if someone is selling you a product, he is earning something upfront out of it. But what most people don\u2019t know about is the concept of trail commissions that is earned by distributor. Every year for as long as you are invested, the distributor keeps earning \u00a0upto 1.5% of your investment as commission. Since most people who invest into mutual funds do it for longer term, the commission paid as trail can take a big bite of your investment . For example Rs 5000 SIP \u00a0invested monthly for 25 years, you could end up paying almost\u00a0Rs 30 lks as commissions, almost 20% of your corpus. (assuming you make 15% p.a compounded returns, paying a modest 1% as upfront and 1% as trail)<\/p>\n

Direct<\/h4>\n

Purchasing mutual funds direct would mean investing with the fund house directly without using distributor as intermediary. This would mean a saving of both upfront and trail commission on your investment. To invest directly, you can visit the fund house\u2019s website or office, fill up the form and invest into the fund.<\/p>\n

The flipside to this is that you have to track investments in different funds separately, sign multiple NACH forms for SIP, extremely inconvenient to stop the SIP, make your own capital gain statements and etc.\u00a0All investments done today by institutions are in direct mode. But almost 90% of all investments by retail investors are still through distributors because of lack of awareness or access to a convenient platform to invest with the “Direct” option.<\/p>\n

A recent circular from SEBI allowed exchange platforms to offer direct mutual funds in demat form, and \u2026<\/p>\n

Introducing Coin \u2013 our direct mutual fund platform<\/h4>\n