Do you want to invest in mutual funds? Buy directly from an AMC or choose an aggregator?

Have you ever wondered whether the money you put in mutual fund units purchased from a broker or aggregator is safe? Could the investment amount shown on your mobile phone screen be different to the actual investment amount you have?

Well, if you have purchased the units directly from the AMC (asset management company) website then you have nothing to worry about but if you have purchased them elsewhere then your fears are not unfounded. Usually, there is nothing to worry about especially if you purchase these units from a reputed platform.

Recently, a mutual fund investor accused Groww of fraud, alleging that investments made through the app were not accurately reflected in the mutual fund’s records upon redemption, raising concerns about the platform’s transparency and also drawing scrutiny of the larger issue of trust in these platforms.

So, should investors opt for such aggregators or brokers while buying mutual fund units or should they buy directly from the AMC website?One of the major advantages of investing through these aggregators is that you can invest in various schemes of multiple funds on a single platform.

For example, if you want to invest in five different schemes offered by different fund houses, you don’t need to create separate accounts on all these platforms – all you need to do is create an account with the aggregator and manage your investments in a one-stop shop.

Investing via aggregators

When you buy via an aggregator, the entire investment and redemption experience is easy and convenient. Let me explain this: For example, if you want to invest in schemes of 6 different fund houses, all you need to do to execute the trade is to open an account with the aggregator or broker on their portal or app.

At the time of redemption, investors can also select and redeem their units without having to visit the website of each AMC.

Investing directly in AMC

Buying mutual fund units directly from the asset management company portal can give you higher returns as it is a direct transaction and there is no middleman involved. Moreover, as you are dealing directly with the fund company, there is no scope for misappropriation of funds.

Conversely, these transactions can become a bit cumbersome if you have to visit the individual AMC’s website, open a separate account and make your investments.

What do experts suggest?

While experts suggest that investing directly in an AMC is safe and financially prudent, it can be tedious, especially if you are investing across multiple funds.

Sridharan Sundaram is a SEBI registered Investment Advisor. Wealth Ladder Direct“If the aggregator keeps the funds in its own pooled account, then it is not advisable to invest via the aggregator. But if the funds are transferred directly to the AMC, then there is no problem. However, the best case scenario is to invest directly on the AMC’s portal.”

Ms. Priti Zende is a SEBI registered investment advisor. Apna Dhan Investment Services“Advanced technology has made it extremely easy to invest in financial assets. Investors are also looking for an easy way to invest along with a consolidated view to track their investments on a daily basis. This same desire to track their investments has made aggregators popular among investors.”

“But if you are investing in a direct investment plan, you don’t need an aggregator. You can simply invest directly through the AMC website. Investing through the AMC portal is much safer as you are dealing directly with the mutual fund company,” she added.

However, investing in multiple mutual funds can become a tedious task for investors, who have to create an investment excel and reconcile those investments with the CDSL or CAS statement, she adds.