in Finance, Investment, Mutual Funds

Mutual Fund Investment with zero entry load, brokerage and service charge.

As per guidelines of Securities & Exchange Board of India (SEBI) via this circular, no entry load (usually 2.25%) shall be charged for direct applications received by the Asset Management Company (AMC) i.e. applications received through internet, submitted to AMC or collection centre/ Investor Service Centre that are not routed through any distributor/agent/broker.

Also apart from that, SEBI has also removed entry load from all mutual funds from August, 2009. There will be no entry load on any mutual fund schemes from now on. Distributors will now have to disclose commission for schemes.

If you are making investment in MF (lump-sum or SIP) and you route your application through a broker (online trading accounts like Kotak, ICICI direct etc.) or agents, You can be charged service fees or brokerage other than the application amount.
To avoid paying the commission/brokerage or service fees, you now have to invest directly with the Mutual Fund i.e. you have to submit the form directly to the Mutual Fund without the assistance of any agent/distributor. Mutual Funds bought through sites like ICICI direct, India info line, Kotak securities would also be considered as investment through brokers. You may be charged service charge on these investments.

It shall also be applicable to additional purchases done directly by the investor under the same folio and switch-in to a scheme from other schemes if such a transaction is done directly by the investor.

What is entry load? Suppose you decide to invest in MF. Say the price (in Mutual fund jargon it is called Net Asset Value or NAV) of one mutual fund unit is Rs 10. And the entry load is 1% then you would have to pay Rs 10.10 for one unit of Mutual Fund. See this to understand how much each MF equity scheme charges as front load. Most charge 2.25% so you end up paying Rs 10.225/- per unit.This load charges is used for meeting marketing, selling and distribution expenses. Or in a nut-shell this money goes to your broker. Now as we know, brokers are making more money than the mutual funds themselves. So it means most MFs are using brokers as the way to sell their schemes.

If you can choose your fund. All you need to do is fill the form and send it to concerned AMC/ Investor service center to save on the entry load.

Now question comes how to apply directly to the AMC.

Download the mutual fund form from the AMC website. Take a print out, fill the form and submit to your nearest CAMS or Karvy Investor centre along with copy of PAN card, SIP form(if required) and cheque. Please find the download links for all the AMCs below.

ABN AMRO Mutual Fund
AIG Global Investment Group Mutual Fund
Baroda Pioneer Mutual Fund
Benchmark Mutual Fund
Bharti AXA Mutual Fund
Birla Sun Life Mutual Fund
Canara Robeco Mutual Fund
DBS Chola Mutual Fund
DWS Mutual Fund
DSP Merrill Lynch Mutual Fund
Edelweiss Mutual Fund
Escorts Mutual Fund
Fidelity Mutual Fund
Franklin Templeton Mutual Fund
HDFC Mutual Fund
HSBC Mutual Fund
ICICI Prudential Mutual Fund
IDFC Mutual Fund
ING Mutual Fund
JM Financial Mutual Fund
JPMorgan Mutual Fund
Kotak Mahindra Mutual Fund
LIC Mutual Fund
Lotus India Mutual Fund
Mirae Asset Mutual Fund
Morgan Stanley Mutual Fund
PRINCIPAL Mutual Fund
Quantum Mutual Fund
Reliance Mutual Fund
Sahara Mutual Fund
SBI Mutual Fund
Sundaram BNP Paribas Mutual Fund
Tata Mutual Fund
Taurus Mutual Fund
UTI Mutual Fund

Investing online with zero entry load/service charge/brokerage:
For investing online on mutual fund’s websites, you need to have HPIN for that particular AMC. If you are already invested in any of the scheme of an AMC, you may fill PIN form and submit to nearest investor centre to get the PIN generated. Also If want PIN generated for your new investment don’t forget to check the online transaction option in mutual fund application form. After PIN generation, you can transanct online on AMC websites.
You may find PIN form for various AMCs in the downloads section of the website. Some of the AMC like ICICI, Birla also provide instant generation of PIN without any paperwork. Also please find below websites of AMC where you can login and buy, transfer and redeem mutual funds online.

Kotak Mutual Fund
Birla Sun Life Mutual Fund
Principal Mutual Fund
DSP BlackRock Mutual Fund
Reliance Mutual Fund
SBI Mutual Fund
HDFC Mutual Fund
ICICI Pru Mutual Fund
Franklin Templeton Mutual Fund
Fidelity Mutual Fund
UTI Mutual Fund
CAMS Online Transaction Service
Karvy Online Services

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108 Comments

  1. Good and informative article. Got this details from Deepak Shenoy’s Blog.

    Hope current ban on Entry load will change most of the AMC and we will see their online transcation facilities available in coming days. If you had a pin, you can redeem or switch online in CAMS ( not tried in Karvy as it was favourites with AMC back in 2003-2004).

    For SBI, you don’t have kind of online interface similar to others. You can buy and use same folio number and money is deducted from Online Banking facility. You can see units on CAMS site if you got PIN.

    Franklin Templeton got their own Registar Services (like UTI) so that is again pain. But their online interface is good and they provided this facility since long time.

    I prefer CAMS for their reach (Office in Tier II and Tier III), technology use and number of AMC’s which are available with them are highest.

  2. Pankaj,

    This site is really informative for first timers like me.

    Can you suggest me for the query below?

    I want to invest around Rs 10,000 a month in Mutual funds. How many schemes I should go for. I am going to be first time investor.

    Reading your article it seems that I need to download the MF form, fill the form and go to
    the Karvy centre and submit it. This shall avoid entry load.

    Does the Karvy centre charge for this?

    Also can you give me a list of good MF that I should invest?
    I would start a SIP in these MF.

    Which option is better. Growth / Dividend?

    Also suggest how to claim the money back when needed? Is it by approaching the Karvy centre?

    • @Maulik,
      Entry load on all mutual funds has been scraped and now it does not matter from where you apply, you will not be charged any entry load by AMC.
      However as entry load was used by AMCs to pay commission to agents.
      Now agents/brokers may charge service fees as they will be no more getting commission from AMC. So If your broker does not charge any service fees, you can apply through him also.
      In case you want to do it direct through CAMS or Karvy, you may download form and submit same after filling in any of their transaction centers. They do not charge anything for this. Also make sure you also fill HPIN (for online login) form along with application so that you don’t have to go to karvy of cams office, next time you want to do a transaction; you can do that online.
      If you want to redeem mutual funds, then you have to give a written redemption request in CAMS/Karvy office But if you have online login, you can also do it from your home @ Internet.

      Now comes investment, If you want to invest 10k per month. Split this into diversified equity, Gold and debt funds.
      Growth option is better if you want to be invested for a longer period, dividend when you need you money back at regular intervals.

  3. Dear Pankaj Batra

    Is/Are there any site(s), where one can buy these MF units WITHOUT any charge whatsoever ?? (no brokerage, no entry-loads, no demat transaction charges for MF units, etc.)

    I heard of one such site, but am not sure whether they can be trusted : http://www.fundsindia.com

    Also, which online trading portals do not charge anything for investing in MFs thru their online trading portal ?? I heard that Kotak securities and Share Khan do not charge anything, but is ut true ?

    Kinldy guide as I wish to invest about rs. 4- lacs in MF units without entry load or brokerage and I wish to invest long-term

    Thanks & Awaiting your reply

    • @Agarwal,
      You can buy mutual fund without any brokerage, entry load or service charge; directly on the mutual fund website. For that first you will have to get HPIN for the same for login into the online account. All mutual fund houses generate and send PIN by post after getting a written request along with folio details.
      What you can do is for the first time, you can submit the mutual fund form by hand in CAMS/Karvy offices and along with that submit a form for PIN generation.
      Other sites like fundsindia or others may not be charging as of now but may charge in future as current model does not give them anything and is not sustainable for long.
      Kotak Securities, charges service charge for transactions. No idea about sharekhan.

  4. Thank you VERY MUCH for your reply

    But my problem is that I wish to invest in at least 6-7 different Mutual Funds
    That means I will have to do paperwork for 6-7 times, where there is always a time-lag

    And whenever I drop an MF, and add a new MF, again I have to do that work, again with a time-lag

    So therefore, I was looking for a place / site / method where I can invest for multiple MFs, with the ease of switching / adding new / deleting old MFs

    Any suggestions ? Do Karvy or CAMS themselves any such online facility (since they are collecting forms anyways) ?

    Lastly, would you be able to recommend 7-8 MFs which are equity based, and agggressive for long-term investments ?

    [email protected]

    • @Mr Agarwal,
      You will have to do it only one time with each mutual fund house. A single PIN is provided for a folio and you can keep multiple funds by a AMC under same folio.
      Karvy and CAMS do not provide such facility but NSDL is coming up with such infrastructure (Read here for more).
      Some good funds are : Birla Sunlife mid cap fund, HDFC Equity fund, HDFC Top 200, Reliance growth, HDFC tax saver, Sundaram Tax saver, SBI magnum taxgain and
      Franklin India Taxshield

  5. Hi Pankaj
    I am investing in following MFs through monthly SIP.
    Ques1 – Are these funds good for investment as of today?
    Ques2 – Could you please let me know which fund, out of these should i continue investing and which i should redeem the units completely.
    Ques3 – I want to start investing some additional amount through SIP. Should i invest in some of these below or you would like to suggest some new funds.
    Ques4 – Is it possible to increase the amount of existing SIP or I need to apply for a new SIP?

    Birla Sun Life Frontline Equity Fund Plan A – Gr (from Oct 2008)
    HDFC Equity Fund – Div (From Jan 2008)
    Reliance Growth Fund Gr (From Oct 2008)
    SBI Magnum Sector Fund Umbrella – Contra – Div (From Jan 2008)
    Sundaram BNP Paribas Select Focus – Gr – (From Oct 2008)
    HDFC TOP 200 Fund Gr ( From June 2010)

    Regards
    Manish

    • @Manish
      1. All these funds are some of the better equity funds in market.
      2. There is no need to redeem these funds. You may remain invested in them, If you are not in a financial need.
      3. You may start new investment in HDFC Top 200 Fund, Birla Sunlife Frontline equity fund and HDFC Equity Fund. You may also choose from DSP Backrock Top 100 fund, Sundaram S.M.I.L.E Fund, Sundaram Select Midcap and ICICI Pru Discovery Fund
      4. You can start new SIPs for increasing the SIP amount. Lets say you already have SIP for 5000 per month, you may add a new SIP of 2000 in same folio.

  6. Hi Pankaj
    Can you pls suggest a simple portfoli tracker which can be used for tracking investments( MF, Equity, Debt etc)

    Regards
    Manish

  7. Hi Pankaj,

    I started with an SIP of Rs.3000/- with Reliance Growth Fund in Aug, 2008 through a broker. Looking at the monthly statements of last few months I realized that I’m still being charged with 2.25% entry load on the transactions.

    Its been over a year since the entry load has been banned, I would like to know, if I’m still obliged to pay entry load on the transactions?

    If yes, is there anyway, I can prevent it. ?
    If no, what should I do from being charged with the entry load ? Also,can I reclaim entry load, which I was being charged for over a year, since the ban.

    Thanks in advance !!
    AC

    • @Amit
      You must stop your SIP and start a fresh application again.
      All existing investments continue to run same, if they are not started fresh.
      I think, already gone entry load won’t be reclaimed.

  8. KIndly advise if one should go for M.f; in view of the high NAV’s presently or buy at next dip.Let me know the TEN BEST FUNDS.kindly send me your reply in my inbox.
    many thanks

    • @Ajay
      Market can not be timed, you never know whats the next level.
      So Its better to invest through SIPs which averages out cost of buying.

      You can choose to invest in HDFC Top 200 Fund, Birla Sunlife Frontline equity fund, DSP Backrock Top 100 fund, Sundaram S.M.I.L.E Fund, HDFC Equity Fund, Sundaram Select Midcap and ICICI Pru Discovery Fund

  9. Hi Mr. Pankaj.
    Plz let me know how can I get a financial knowledge about market, mutual funds share market & other securities .I also want to become a financial analyst so that i could analyse in which securities, MFs, Shares should I invest? Plz reply

    • @Sunil
      Start reading financial newspapers (like Economic times) and business magazines. Most of these have sections on share markets, personal finance and mutual funds.
      You can also read articles on various websites like Rediff, ValueResearchOnline and personalFn.com.

    • @Mani
      Capital gain on SIP is calculated on monthly basis. Lets say you bought X units at P price in a month and sold them at Q price then capital gain for those units will be (Q-P)*X.
      Similarly you can compute the gain for all SIP month and add all to make total capital gain.
      On Equity mutual funds, income tax on capital gain is zero, if they are kept for more than one year.

  10. Hey Pankaj,

    I was actually new to this Mutual Fund world….Not anymore thanks a bunch to your blogs
    Need some advice from you……

    I just started 3 SIP’s with ICICI (Tax Plan Growth), HDFC (Tax Saver Growth), Reliance (Reliance Long Term Equity Fund) Rs 2000. My Agent charged me Rs 2000 for each Plan…..In total Rs 6000 for 3 Plans.

    Now Questions:

    First: It appears to me that I charged a lot as I could have done it by myself.
    Second: Are these good funds??
    Third: I want to invest in some more mutual funds let me know which one do you think I should go for……..???

    Well that’s it for now….Please reply as per your convenience…If possible CC me on my email id [email protected]

    Regards
    Manish Tomer

    • @Manish
      Thanks for showing trust.

      First of all, I think, Agent must have charged 6000 towards first SIP check for the investment and not for his commission. All this amount would be invested in your folio. Please confirm the same from agent. Charge from agent cannot be so high.

      1. As of now, Mutual funds do not have any entry load, so there is not much difference by investing directly by yourself or though any agent, until and unless agent asks for any service fees.

      2. These all are good funds.

      3. Other good tax saving funds are : Canara Robeco Equity Tax Saver, HDFC Taxsaver, Franklin India Taxshield, DSPBR Tax Saver, Fidelity Tax Advantage and
      Sundaram BNP Paribas Taxsaver.
      Among Equity diversified, good funds are Birla Sunlife Frontline equity fund, HDFC Top 200 Fund, DSP Backrock Top 100 fund , ICICI Pru Discovery Fund, Sundaram Select Midcap, HDFC Equity Fund and Sundaram S.M.I.L.E Fund

      To know about Growth, dividend and dividend reinvestment modes, please read this post: http://www.pankajbatra.com/finance/growth-dividend-payout-reinvestment-mutual-fund-investment-options/

      • Thanks for your precious time & Information Mate!!!.. I asked the same question to my Agent about dividend & Growth couple of days ago haven’t heard back from him 🙁

        Just so that you know I live in Canada…..will be in touch with you as i have some plans to invest in India. I just visited India and thats when i asked my younger bro. to invest in Mutual Funds.

        What do you think about this: I have a line of credit here on which i only have to pay 3-4% annually…..Do you think its wise to use my line of credit and then invest in mutual funds in India??

        Regards
        Manish Tomer

        • @Manish
          As of now, Investment in any emerging market will give better return than in US/Canada. Mutual fund and stocks in India, will give more than 12-15% in a longer run.
          It make sense to invest in India from your credit in Canada. But also make sure that all taxation rules are followed as an Non-resident Indian.

  11. Hello Pankaj,

    Please suggest how much I have to pay for SIP if I plan to buy units of 5000 Rs each month.
    I heard City Bank doesn’t charge for this, is it true?

    Ashish sharma

  12. hello Pankaj,
    I want to invest for 30 years in mutual funda through SIP.Monthly contributioon would be 20000 per month with 10% increase in investment every year.
    I have read few articles that portfolio has to be very diversified to have huge gain in long term(as even a single percentage more on huge corpus would fetch huge difference -specially between 20 and 30th years)
    So i wld like to include, blue chip,diversified( only groth funds), 1 index fund, 1 mid cap,1small cap(very high risk fund), 1 category fund(which should be that banking,infrastructure..etc) and 1 fund investing in emerging markets(like brazil,china etc).Like this for 15 years….then less risky funds(mostly balanced funds) until 25th year and then no risk funds for last 5 yr.My target is to raise around 7 crore after 30 years.Please suggest.

    • @Kapil
      Your planning towards future seems impressive.

      Its pretty long term and needs review (exit and re-invest) of planning every five years as economies/industries keep changing in this interval.

      For now, you can start your investment in mutual funds from following:
      Diversified Large cap: Birla Sunlife Frontline equity fund, HDFC Top 200 Fund, DSP Backrock Top 100 fund, Reliance Regular Savings – Equity, ICICI Pru Discovery Fund
      Small/Mid cap: DSP Blackrock small and midcap fund, Sundaram Select Midcap, HDFC Equity Fund, Sundaram S.M.I.L.E Fund

      • Dear Pankaj,

        Please correct me if I am wrong. (1) ICICI direct does not charge any service charge for investing in Liquid Funds. (2) ICICI direct does not charge any service charge for switch out and switch in. So I buy the best performing Liquid Funds of HDFC, BIRLA & IDFC in Lump SUM say 1.0 Lacs each. Now as per the market conditions I switch out to the best performing Div Eq fund of respective funds. This way I donot pay any service charges to ICICI. Also do not keep any idle money. What do you say?

        • @Manoj
          Frankly, I have not used ICICI direct, so won’t be able to comment on their service charges etc.
          But their mutual fund FAQ page shows the charges here: http://icicidirect.com/mffaq.asp

          Regarding switch out and in, You can try doing it for small amount and see if they charge any service fees for the same. If it works w/o charges you may continue doing so.

  13. I started with SIP in IDFC Premier equity and IDFC SME through a broker from October 2011 (I did not pay any service fees to him). If no entry load was charged by fund house then why broker still sell these schemes (in case they are not charging any service fees).

      • Thanks for the prompt reply. So essentially we are not getting charged for any transactions through brokers in case broker does not charge any service fees. It is the arrangement betweeen AMC and broker, right?

        • @Ajay
          Yes, in case broker/agent does not charge service fees, there is no overhead of investment done through them.
          Its an arrangement between AMC and agent.
          Mutual fund companies pays commission to agents to popularize their products and increase their AUM (assets under management).

  14. HI Pankaj,

    i want to invest in Mutual Fund for the first time.from the review i found HDFC Top 200, HDFC Taxsaver….
    can u suggest is this good time to invest in below SIP ??
    HDFC Top 200 (Rs:1000)
    HDFC Tax Saver(Rs:1000)

    • @Basav
      Its always right time to start SIP as cost of buying is averaged out.
      HDFC top 200 is a good fund and you can go ahead with it.
      But HDFC tax saver would be beneficial this financial year only as from next year, under direct tax code, tax saving mutual funds won’t carry tax benefit.

  15. MR PANKAJ
    now a days icici bank provides a facility like.. you can buy MF from icici bank net banking, they are attach a new column for MF.
    you can buy MF from there online

    does that means they take some extra charges for that like (commission and other).
    is there any drawback.

  16. Dear Pankaj, went through your blog. Really informative. I have a question:

    I have a demat ac with sharekhan which I use to buy bonds and equities. Now I am planning to invest 20K in ELSS for tax saving purpose. But I am not sure about the brokerage they would be charging. Their commission disclosure document mentions 2 types of commissions: 1) Upfront category and 2) Annulised Income. For ELSS these are 0/5/1.89 and 0/1/25/0.28 (as min/max/avg). What does this mean? Should I go directly to banks like HDFC to buy the MF to avoid charges? Please advice.