Investing in Mutual Funds Beyond PhonePe and Similar Apps

In our fast-paced digital world, convenience is key. PhonePe, a top UPI payment platform in India, understands this well. They’ve ventured into the world of mutual fund investments, showing their dedication to making finance easy and accessible.

But the big question is, are PhonePe Mutual Funds as good as they seem? As someone who knows a lot about mutual funds, I’m here to break down this platform for you.

We’ll look at its strengths, weaknesses, and everything in between, helping you figure out if it’s the right choice for your investment journey.

Is PhonePe Mutual Fund Safe? Unraveling the Security Measures

Let’s address the elephant in the room first: safety. When dealing with your hard-earned money, concerns are natural

PhonePe acts as a distributor or agent for mutual funds, meaning they don’t directly sell mutual funds as an agent. This implies that PhonePe doesn’t have direct access to your money; instead, they only have access to information about your investments.

This setup is similar to buying insurance through PhonePe. When you purchase insurance, your money goes directly to the respective insurance company, and they issue the policy to you via email. You can also track the policy within the PhonePe app.

Now, you might be wondering how PhonePe earns from these transactions. They earn a commission from the insurance company for selling insurance, and similarly, they receive a commission from mutual funds. The exact amount of this commission varies and is something we’ll explore further.

So, the crucial question remains: Is your money safe with PhonePe? The answer is yes. Your money goes directly to the respective mutual fund company, ensuring the safety of your funds.

PhonePe Mutual Fund Charges: A Transparent Approach

PhonePe gets a commission from mutual fund companies: Think of it like a referral fee. Just like a salesperson gets a commission when you buy something through them, PhonePe gets a commission when you invest in a mutual fund through their app.

The commission depends on the expense ratio: The higher the expense ratio of the fund you choose, the higher the commission PhonePe receives. Expense ratio is a percentage of your investment that's deducted annually to cover the fund's operating costs.

Let's look at a simple example to compare the returns of investing in a regular mutual fund through PhonePe versus investing in a direct fund through platforms like Kuvera, Groww, Zerodha, upstox ,ETmoney or the mutual fund company's direct site.

If you invested Rs. 1,0,0000 lumpsum in a Nippon India Direct Fund through Kuvera, Groww, Zerodha, or the direct fund site for 10 years, your returns would have been Rs. 13,37,781.

However, if you chose to invest in the same fund through PhonePe, your returns would have been Rs. 12,15,165.

The difference, which is Rs. 1,22,615, represents the commission paid to PhonePe by the mutual fund companies for bringing in investors. So you are losing 1,22,615 rupees just by investing in phonepe.

This example highlights that when you invest directly through platforms or the mutual fund company's site, you may potentially earn more returns because there's no commission involved.

On the other hand, choosing PhonePe involves paying a commission, which can impact the overall returns on your investment over time. It's essential for investors to consider these factors and decide based on their financial goals and preferences.

How do we know which mutual fund is regular or direct plan?

Name of the scheme:

  • Direct scheme: Many direct schemes mention "Direct" in their name. For example, HDFC Top 200 Direct growth.
  • Regular scheme: Regular schemes usually don't have "Direct" in their name. For example , HDFC Top 200 Fund

If you're unsure about a specific scheme, simply visit and check the nav of Direct and Regular. This will give you better information.
only a SEBI REGSITRED INVESTMENT ADVISOR is allowed to sell Direct mutual funds.

PhonePe SIP Review: Systematic Investment Plan

Systematic Investment Plans (SIPs) have gained popularity as an accessible and disciplined approach to investing in mutual funds. PhonePe SIPs offer investors the flexibility to contribute small, periodic amounts, harnessing the power of compounding over time.

When you begin a Systematic Investment Plan (SIP) in mutual funds, it's crucial to focus on the specific fund you're choosing for your SIP rather than just the act of starting SIP. Remember, SIP is a way of investing, and your returns depend on the type of fund you invest in.

If you look at the SIP funds recommended by PhonePe, they suggest SBI Contra and ICICI Prudential Value Discovery Fund. These equity funds come with high risk and don't perform well in every market situation.

For instance, people who started investing in 2014, 2015, or 2016 with ICICI Value Discovery Fund experienced lower returns than the market index.

This implies that the funds recommended by PhonePe may not be the best choice. As a platform, PhonePe doesn't have its own algorithm to select mutual funds; instead, they use ICRA mutual fund software.

Investing in such high-risk funds might harm your wealth rather than help in its growth. It's essential to be mindful of the type of funds you choose to ensure they align with your financial goals and have the potential to create wealth over time.

PhonePe Liquid Funds: Unveiling the Good and the Bad

While PhonePe's liquid funds might sound tempting for their slightly higher returns compared to your bank account, there's a hidden bite: PhonePe takes a commission, even on those small 4-5% returns you earn. This nibbles away at your gains.

And another myth to bust: liquid funds, though considered low-risk, aren't immune to losses. History shows some have even delivered negative returns. Yikes!

So, before blindly investing in funds from PhonePe's recommendations, do your own research. Check the fund's portfolio to see what it invests in. This helps avoid surprises like negative returns.

Remember, PhonePe as a distirbuotr doesnot act as financial advisor. They won't hold your hand through everything. Doing some research yourself puts you in control and helps you find funds that deliver better returns, even if they're not on PhonePe.

Think of it like buying groceries. You wouldn't just grab the first thing you see, right? Do your research, compare prices, and find the best deal for your budget. Same goes for your money!

So, while PhonePe can be a convenient starting point, investing wisely means taking the wheel yourself. Do your research, compare options, and choose funds that work for you and your goals, not just PhonePe's bottom line. Happy investing!

Conclusion: Which platform is the best to invest in Mutual Funds?

In conclusion, when deciding whether to use PhonePe for mutual fund investments, it's important to weigh the pros and cons. While PhonePe offers a convenient platform, it's crucial to recognize that it operates as a distributor, and investing through it may involve commission costs, affecting your overall returns.

For those seeking a more cost-effective and potentially higher-return approach, considering direct funds is advisable. Direct funds eliminate the intermediary, meaning no commissions are deducted from your returns.

To venture into the world of direct funds, platforms like Kuvera provide a user-friendly interface and the ability to invest directly, allowing you to maximize your returns without the added layer of commission costs.

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