How are FundsIndia’s services Free?

One of the frequently asked questions about our mutual fund services is how we are able to offer it for free.

Yes, all our mutual fund services, including our advisory services, are actually free – no transaction fee, no account opening and no account maintenance fees.

And, no hidden fees either (we don’t know what ‘hidden fees’ mean, but a lot of people are curious if we have them).

The reason we are able to offer our MF services for free is that we get paid a small fee by the mutual fund companies. These fees which we call the ‘servicing fees’ are better known as trail fees in the industry.

These fees are typically 0.10% to 1.0% a year depending on the fund house and the type of scheme (equity or debt or liquid). They are paid every year as long as the investor stays invested in the funds.

Why do the mutual fund companies pay us this? MF companies are very good at managing money (fund management), and not really well equipped to service customer directly. So, they rely on services such as FundsIndia to support and service their customers. And, they pay a fee for that.

Can such a small fee be sufficient for a business? Yes, as long as two conditions are met – one is that we have enough investors investing through us, and two is we keep our costs low. Since we are an online operation, we can support a lot of customers while keeping our costs low. That is the secret of our success 🙂

Will we ever charge in the future? We do not have any plans to start charging for our MF services. Having said that, we have to admit that we cannot predict the future. If something fundamental changes in the way trail fees are paid, then we might be forced to come to our customers to support us. There are no indications of that happening either. In any case, if something like that happens, we will let our customers know upfront and give them a clear, cost-less choice to exit their account (without redeeming any funds) before any charges are levied.

Hope these clarify your questions about how we are a really FREE service!