Buying Mutual Funds Online has been made easy. The National Stock Exchange –NSE is set to launch a Mutual Fund Service System – MFSS on November 30. Recently, SEBI had earlier permitted brokers to use stock exchange terminals to buy or sell Mutual Fund products. This move is aimed at increasing the reach of Mutual Fund products.
The new system allows brokers to buy and sell mutual funds through the exchange. Transactions are to be settled on a T+1 basis. Currently NSDL will be the sole Depository, for settlement of the system.
What does this mean for the investors?
This would essentially mean that investors can buy Mutual Fund units through their brokers. They can buy Mutual Fund units in their existing trading account, just like buying shares. It is going to bring about more convenience for the investors who need not have to go to a separate distributor now.
Investments in mutual funds have been made easy for the investors, with just a click or through a phone call. But there are couple of points to ponder about.
1. Investments made through distributors or direct online purchases don’t have an entry load. But, in this case you are expected to pay the brokers the usual commissions of about 1%, which is definitely on the higher side.
2. Though it is made easier for retail investors, the Mutual Fund investments may end-up turning investors into traders, as it is been happening in equity markets.
Anyway this is another paradigm shift for the mutual fund industry and for the investors from the way they have been investing till now.