Your money: Check costs, model before investing through direct MF platforms

Moneyfront.in is a robo advisory platform that offers live feeds

With the Securities and Exchange Board of India pushing for direct plans in mutual funds, more online players are beginning to enter the segment. In the past couple of months, two new online players — Moneyfront.in and Clearfunds.com — have entered this space which already has three-four players. 

So, what’s on offer? A lot of data like net asset value, returns of schemes and others. What sets them apart is the advice they provide, based on algorithms culled from  data provided by investors themselves. But it comes for a fee. 

Moneyfront.in, which was launched earlier this month, is a robo advisory platform that offers live feeds, regular updates, gain loss reports, analysis of schemes with ranking. The online platform does not charge any fee in the initial six months. After that, there is an annual fee of Rs1,200 to use the platform. Clearfunds, on the other hand, charges a flat fee of Rs199 each time you purchase a direct mutual fund scheme or start a systematic investment plan. But subsequent increase or decrease in the SIP amount, redemptions, switching between funds are not charged. “Investors don’t need go to four different fund houses, have four different login IDs and passwords. They can do it through one platform. We also offer advice on portfolio rebalancing and model portfolios for investors,” says Mohit Gang, Co-founder and CEO, Moneyfront.in.  

But before you register or sign up on an online platform, do check for a few basic hygiene factors. Check if the founders are qualified to offer financial advice, is risk analysis  being done, is the methodology of fund selection transparent and is it easily available on the website and how easy is the system to process, Abhinav Gulechha, SEBI Registered Investment 

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Adviser says. Then, there is the cost factor. For example: If you are paying Rs1,000 per annum for investing Rs10,000 annually, the expense comes to 10 per cent of the investment value. Even though the difference in returns between a direct plan and a regular plan is around 75-100 basis points annually, the benefit would be wiped out. You might as well go for a distributor and invest in regular scheme.   

According to Suresh Sadagopan, founder, Ladder7 Financial Advisories, an online platform that offers advice as well as transaction makes sense as they will offer conflict-free advice, as they don’t charge commissions from fund houses. Another option is to invest through the MF Utility platform, which has both direct plans and regular plans. But it has no reporting. It is 

purely a transactional platform. “Or you can test the waters with smaller amounts, since these are all new players and their methodology has yet to be tested,” Sadagopan adds.