How to invest in mutual funds directly

As we step into the final quarter of 2025, mutual fund scenario in India seems mature and dynamic. SIP inflows keep increasing above Rs 280 billion (bn) per month, and the total mutual fund AUM has crossed Rs 65,000 bn comfortably, reflecting deeper retail participation.

While benchmark indices such as the Nifty 50 and BSE Sensex hover close to their record highs, the broader market also reflects mixed sentiment.

Some mid and small-cap stocks are under pressure due to stretched valuations, while themes like manufacturing, defence, and PSUs attract investor interest.

In such an environment, investors are not after mere returns but are looking for smart ways of investing, cost-cutting, and having control over their portfolios. It is here that direct investing in mutual funds has emerged as a strong approach.

Unlike the regular route where distributors or advisors handle investments and earn commissions, direct investing empowers individuals to manage their portfolios independently.

Direct plans have been the preferred mode for financially aware investors on account of lower expense ratios, better transparency, and fast-growing digital platforms.

If you want to be in control of your investments and progress towards creating wealth in a much better way, here’s a comprehensive guide on how to directly invest in mutual funds with updated tools, processes, and tips relevant for 2025.

1. Understanding Direct vs Regular Mutual Funds

Regular Plans are sold through distributors, relationship managers, or any other intermediary charging commissions, which are added to the overall expense ratio of the fund.

A direct plan, on the other hand, is purchased directly from the mutual fund house or from platforms registered with SEBI sans any intermediary.

Expense Ratio Difference

The expense ratio for a direct plan is typically 0.5–1% less than that of its regular variant.

Although this appears to be a small number, the impact it creates on long-term compounding is substantial. For instance, Rs 100 investment earning 12% annually for 20 years could grow nearly Rs 30–40 higher through a direct plan.

Transparency & Control

In a direct plan, an investor selects funds, monitors the performance himself, and rebalances his portfolio. This works best for investors who are able to do their own research or follow reputed fund analysis platforms.

But direct investing also means responsibility for fund selection and monitoring-which may not be undertaken by every investor without some basic understanding.

2. Why Direct Investing Matters in 2025

In 2025, mutual fund investors are more informed, digital-savvy, and cost-conscious. Several market trends have made direct investing even more relevant:

Rising Awareness: Post-COVID, retail investors have embraced financial literacy and online investing.
Higher SIP Flows: Consistent SIP contributions show confidence in long-term wealth creation, even amid market volatility.
Digital Access: Fund houses, apps, and registrars have simplified KYC, investment, and redemption processes.
Performance Divergence: As fund categories show varying returns (e.g., small caps underperforming while large caps stabilize), investors prefer having direct control over portfolio rebalancing.

Overall, direct investing aligns with the shift towards self-managed, goal-oriented investing in India’s maturing capital market ecosystem.

3. Step-by-Step Process: How to Invest in Mutual Funds Directly

#Step 1: Complete Your KYC

Before investing, ensure your Know Your Customer (KYC) is verified. You can do this online through KRA (KYC Registration Agencies) like CAMS, KFintech, or NSE.

Provide your PAN, Aadhaar, photo, and address proof — most fund houses complete eKYC via OTP-based verification.

#Step 2: Choose a Platform for Direct Investing

You could invest directly through:

AMC Websites: Each fund house (like HDFC MF, SBI MF, ICICI Prudential MF etc.) allows investors to create an online account and buy units directly.

4. Best Platforms to Invest Directly (2025)

In 2025, investing directly has become seamless with digital platforms offering intuitive dashboards, analytics, and paperless processes.

Some of the leading options include:

MF Central: A unified platform backed by SEBI for viewing and managing all your mutual fund holdings.
myCAMS & KFinKart: Registrar-backed apps enabling transactions across multiple AMCs.
MF Utility (MFU): Offers a “Common Account Number” (CAN) for managing investments across 40+ fund houses.
Other Online Investment Platforms: Allow investing in direct plans with portfolio analysis and goal-tracking features.

These platforms have replaced traditional distributor-led channels by offering transparency, lower costs, and superior convenience.

5. Things to Keep in Mind Before Investing Directly

Understand Fund Objectives: Don’t invest just based on past returns — align with your time horizon and goals.
Avoid Over-Diversification: Holding too many funds leads to duplication and tracking difficulty.
Stay Consistent: SIPs work best when continued through market cycles, not timed based on sentiment.
Review Annually: Ensure your portfolio still aligns with your goals and risk profile.
Tax Implications: Remember capital gains tax — 10% on LTCG (beyond Rs 1 lakh) for equity funds, and 20% with indexation for debt funds.

Is Direct Investing for Everyone?

Direct investing is best suited for investors who are:

Comfortable analysing funds on their own
Disciplined in tracking portfolio performance
Aware of basic risk-return dynamics

If you are a first-time investor or prefer guidance, you may consider only a SEBI-registered investment advisor. The cost saved in direct plans is meaningful only when you make well-informed fund choices.

Should You Consider Direct Plans?

As the capital markets in India gradually develop, investing directly in mutual funds is not just about saving on some costs but it reflects the maturing of investors who have taken ownership of their financial goals.