Investing into mutual funds? Should you buy directly from AMC, or opt for an aggregator instead

Have you ever wondered whether your money is safe in the mutual fund units which you bought from a broker or an aggregator? Is it possible that the investment shown on your phone screen is different from the actual investment held?

Well, if you bought the units directly from an AMC’s (asset management company) website, then you have no reason to worry but when you purchased them elsewhere, then your fear is not unfounded. Typically, there is no reason to worry particularly when you buy these units on a reputable platform.

Recently, one mutual fund investor accused Groww of fraudulent practices after an investment made through the app failed to reflect accurately in mutual fund records at the time of redemption. This raised concerns about the platform’s transparency, and also brought the larger issue of trust in these platforms under the scanner.

So, should investors opt for such aggregators or brokers to buy mutual fund units, or buy them directly from the AMC’s website? Well, one of the key advantages of investing via these aggregators is that one can invest in different schemes across fund houses at one platform.

For instance, if you want to invest in five different schemes offered by as many fund houses, then you don’t need to create a separate account at all these platforms. All you need to do is to create an account at an aggregator and manage your investments at the one stop shop.

Investing via aggregator

When you buy via an aggregator, the entire experience of investing and redemption is easy and convenient. Let us explain this. For instance, if you want to invest in a scheme from half a dozen different fund houses, all you need to do is to open an account at an aggregator or a broker on its portal or app in order to carry out transactions.

At the time of redemption as well, investors can choose the units and redeem them without having to visit the respective AMC’s website.

Investing directly at AMC

When you buy the mutual fund units directly from the portal of an asset management company, you stand to earn a higher return because these are direct schemes, and do not involve any brokerage. Moreover, there is no scope of misappropriation of funds because you are transacting directly with the fund house.

On the flip side, these transactions can be a little cumbersome when you have to visit an individual AMC’s website, open a separate account and carry out investment.

What do experts suggest?

Experts suggest that investing directly in an AMC is safe and financially wise, but this can be cumbersome, particularly when you invest across different fund houses.

Sridharan Sundaram, a Sebi-registered investment advisor and founder of Wealth Ladder Direct, says, “It is not advisable to invest via an aggregator if they keep the money in their own pool account. But if the money is directly routed to the AMC, then it is fine. However, the best scenario is to invest directly with an AMC on its portal.”

Preeti Zende, a Sebi-registered investment advisor and founder of Apna Dhan Investment Services, says, “With advanced technology, investment in financial assets becomes super easy. Investors also want an easy way for investment along with a consolidated view for tracking of the investment daily. For the same urge of tracking investment, the aggregators become popular among investors.”

“But for investing in direct plans of investment, you do not need any aggregator, you can easily invest directly from AMC’s website. Investing through AMC portal is much safer as you are directly dealing with the mutual fund company,” she adds.

However, when you invest in multiple mutual funds, it can become cumbersome for the investors. Investors can create an excel for their investment and should match those investments with their CDSL or CAS statement, she adds.