The Indian investment ecosystem has witnessed a transition over the last few decades with the gradual acceptance of digital routes. Mutual fund investments seem to be undergoing many changes these days. The introduction of digital mutual funds has eased the way for people to enter the share market through various apps, thereby boosting efficiency and convenience in investing.
Table of Contents
What Are Digital Mutual Funds?
Digital mutual funds are mutual fund schemes that can be accessed, managed, and transacted digitally via online platforms, mainly mobile apps and websites. These funds operate like traditional mutual funds, but the technology applies to a smoother process for investors in the onboarding, investment, redemption, and tracking of investments.
Growth of Mobile-Based Mutual Fund Investment
This growing population of smartphone-wielding, mobile-internet-happy users across India has led to the parallel growth of mobile-based financial transactions. Investment platforms and fintech companies capitalized on this trend to set up apps that serve as intermediaries to various mutual fund schemes from several Asset Management Companies (AMCs).
Related Article: How to Build a Long-Term Investment Portfolio with Mutual Funds?
Accessibility and Convenience
One of the strong characteristics digital mutual funds have is accessibility. Investors from both urban and semi-urban regions can now invest in mutual funds without the need to visit a bank or financial advisor physically. A sample mobile investment journey would usually entail the following steps:
- App Registration: Signing in on the mobile app will require providing a few basic personal and banking details.
- KYC Verification: Uploading identification and address proof for electronic KYC approval.
- Scheme Selection: Screening and selecting a mutual fund scheme as per risk profile and financial goals.
- Investment Execution: Digitally initiating SIP, or a lump sum investment.
- Portfolio Tracking: Monitoring the fund performance and receiving regular updates.
Regulatory Framework
The Securities and Exchange Board of India (SEBI) has duly encouraged the changes toward digital transactions and the paperless form of onboarding. Additionally, they have developed protection methodologies for investors. The digital mutual fund companies share compliance, security data, and transparency as evinced by SEBI.
Equally, AMFI promotes awareness about mutual funds and incentivizes standardized processes across the platforms.
Relationship Between Digital Mutual Funds and Share Markets
Mutual funds function as an intermediary between customers and the share markets. They mobilize money from investors to buy a diversified portfolio of stocks, bonds, or other market instruments. Digital mutual funds, thus, allow retail investors the option to enter indirectly into the share market, minus the hassle of stock selection and direct trading.
Benefits to New Investors
Digital mutual funds have brought down the barriers to entry for all new investors. Educational content, fund ratings, and automated recommendations on mobile platforms based on investment goals—retirement planning, wealth creation, emergency funding, among others—serve to support would-be investors.
These tools help investors guard themselves from poor and unsuitable fund choices and set the right kind of discipline for themselves by joining in their Systematic Investment Plans (SIPs). Other than that, being able to start SIPs with flexible, lower amounts makes mutual fund investing much easier for people who may be perceived as not having much capital to invest.
Market Trend and Outlook
The demand for digital investment solutions will be further enhanced by increasing smartphone penetration and digital literacy in India. A number of fintech firms and more traditional financial institutions have upgraded their digital offerings to include access to mutual funds with extra features like real-time analytics, voice command, and goal tracking.
Integration with the Unified Payments Interface (UPI) has made it even more effortless to remit payments for mutual fund investments. Investors can set up mandates for repeat SIP payments and instant SMS alerts on the transaction and fund performance.
What to Look For in a Platform?
While a digital ecosystem offers multiple platforms with which to invest in mutual funds, an investor would probably want to assess each platform for usability, funds available, customer service, and a solid security policy. Reputable platforms grant access to a variety of AMCs and a consolidated portfolio view, along with satisfactory client support.
Conclusion
The emergence of digital mutual funds has greatly reduced the effort needed to enter share market investments, and therefore, digital mutual funds provide a convenient and flexible method for the enhancement of wealth. Through mobile-based platforms, investors can now easily study the multitude of schemes available in this space, keep track of their performance, and manage their investments.
Get Latest News Live on Storify News along with Breaking News and Top Headlines from US News, Trump News, Taylor Swift and Travis Kelce, Kamala Harris, Entertainment, Technology and around the world.
