Published On: Tue, Mar 28th, 2017

Zerodha introduces Coin-Commission free direct mutual fund platform which saves huge money

What is a Mutual Fund ?

A mutual fund is an investment vehicle made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets.

Mutual funds today can be purchased in two ways – either through a distributor or directly from the AMC.

To Open a FREE Stock Trading and Mutual Fund account  open here …

Through a distributor

When purchased this way, the distributor earns an upfront commission of upto 1.5% on your investment and a trail commission of upto 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.

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’t 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  upto 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  invested monthly for 25 years, you could end up paying almost Rs 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)

Direct

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’s website or office, fill up the form and invest into the fund.

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. All 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.

A recent circular from SEBI allowed exchange platforms to offer direct mutual funds in demat form, and …

Introducing  Zerodha Coin – the direct mutual fund platform

  • Direct mutual funds in DEMAT form, with convenience of one portfolio across equity, MF, currency, etc.
  • No commissions whatsoever on your investment – either upfront or trail.
  • Easy SIP – start, stop, modify anytime you want.
  • Flat fees of just Rs 50/month for subscribing to Coin irrespective of number/value of MF transactions. Moreover, your first Rs 25,000 worth of investments is absolutely free.

Zerodha’s previous platform (mf.zerodha.com) was in distributor mode and will start redirecting to coin.zerodha.com from today, following SEBI’s move to allow exchange platforms to offer direct mutual fund investments.

All new mutual fund investments will be direct. Your existing mutual fund holdings and SIPs will remain in distributor mode (and there will be no subscription fees for them). If you want to switch your current funds or SIPs from distributor to direct, you may exit them and invest afresh.

We are able to work at such razor thin margins as a business by keeping our operational costs low and not spending on advertising. Do help spread the word. You would not only help us sustain the extremely low pricing model but also maybe help your friends and family save lakhs of rupees as commissions on mutual fund investments that they might be paying unknowingly.

To Open a FREE Stock Trading and Mutual Fund account  open here …

Zerodha’s  Coin is a platform that lets you buy mutual funds online, completely commission-free, directly from asset management companies. Your mutual funds, stocks, currencies, bonds, and more, all in your Demat in one place.

Our large and loyal user base have enabled us to offer low cost stock broking services. Thanks to them, we’re now able to offer direct mutual funds at the lowest industry rate of flat ₹50 / month.

Unlike the other Stock Market Brokers In Zerodha the biggest advantage is you or the customers have the convenience of managing mutual funds, stocks, currencies, bonds, and more, all in your Demat in one place. You don’t have to go to multiple AMC sites to check your holdings.

To Open a FREE Stock Trading and Mutual Fund account  open here …

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