Fifth Dilemma about Mutual Fund-New Funds or Existing Schemes

Today the last episode will end with a direct plan or a regular plan and the confusion of the new funds or existing schemes …

Existing Schemes


Direct Plan or Regular Plan:

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Direct Plan gets better returns, while the selection of regular funds is not easy …
All mutual fund schemes have regular and direct plan options. You have to pay more for regular plans because mutual funds have to pay commission to brokers and distributors in it. On the other hand, direct plans are sold directly to the investors. Hence their cost is low. Therefore, the investor has to pay less fee. Due to the low fee, the return of the direct plan is higher than the regular plan. If you invest for long periods, then due to compounding there may be a significant difference in returns.




download-4-1 Fifth Dilemma about Mutual Fund-New Funds or Existing SchemesHowever, the cheaper option is not always good. Direct Plan means that the fund is chosen by the investor. It does not get advice from any financial advisor. It has to be researched itself, the right fund has to be chosen and its performance needs to be monitored. About this, Hemant Rostagi, CEO of WizenWest Advisers, said, “Many investors themselves cannot decide on asset allocation. For them, choosing the right fund in an asset class, keeping track of their performance, taking the right steps when it comes time and keeping track of goals in the market volatility is not easy. Those who can do this, they should choose a direct plan. At the same time, the regular plan for the general investor is fine. For this, if they pay some more fees, then they get advice on the good fund from the advisor instead. They do not have to worry about the processing of documents themselves in the regular plan. However, not all advertisers work in the interest of the investor. Therefore, your success depends on the quality of advisory service in the regular plan.




New funds or existing schemes: Instead of investing in new funds, it is good to invest money in the existing scheme 
download-4-1 Fifth Dilemma about Mutual Fund-New Funds or Existing SchemesIn recent years, the number of new fund offers (NFOs) has decreased, but still, the new funds are being launched with Dhumalkar. Distributors do their aggressive marketing. You should not fall in the daze. If you look at the track record of funds, then decide about the investment, which has been for many years. From this, you also find out about the fund’s performance in different market cycles. The new fund may look attractive and the fund houses do its aggressive marketing, but there is no track record of the new fund. In this case, on the basis of which the investor decides to put money into it. Also, remember that if the NAV of an old fund is Rs 500 and the new fund of 10 rupees does not mean that the new fund is cheap. It can be costly from NAV fund of 500 rupees.