Buying Mutual Fund from ICICIDirect? Charges you pay after 1 August after SEBI orders

In our recent article about Buying Mutual Fund? What Charges you pay after 1 August after SEBI orders, we had given you the details and an example of how the mutual fund charges be levied to an investor after the SEBI orders for Eliminating the entry loads for Mutual Funds. We had taken the example of ICICIDirect Mutual fund charges. Now, it appears that ICICIDirect has gone for a revision of charges it will take for investments of less than 8 Lakh Rupees.

You still dont have to pay any charges if your lumpsump investment or cumulative investment with ICICIDirect in Mutual Funds has been more than 8 Lakh Rs. The "cumulative value" will be taken as per Value at NAV of your entire MF holdings, at the time of order placement, as seen on your MF Unit Holdings page. Transaction charges will be applied as per the new fee structure, accordingly.

However, if your investment with ICICIDirect in Mutual Funds is less than 8 lakh Rs., then the following charges will apply:

For SIPs - Rs. 30/- or 1.5% whichever is lower
For Lumpsum investments - Rs. 100/-

The benefit will come to those who may want to invest in smaller amounts of SIP. So for example, if you want to invest Rs. 500 per month, then you will only need to pay 500 * 1.5% = 7.5 Rs. per transasction or Rs. 90 for the entire year 12 months) SIP investment.

Will this new scheme really help?
It actually depends upon you and your broker and his charges.
If your broker charges high amount, then you may be a looser on that. But if you can find a good broker who charges low rates, then you can save a lot of money. So you will have some choice. However, you will now have to face and evaluate various conditions set forth by the broker. For eg. For Zero charges, ICICIDirect requires a minimum of 8 Lakh Rs. investment. That is a big amount for any investor.

It is good because now you will know what charges you are paying for investing in Mutual Funds. It will give respite to investors in Mutual Funds who were not keeping a close eye on the Mutual Fund Charges, which can build up to a significant amount in the name of distribution charges, marketing charges, fund management charges, entry load, etc. Now, the cheque that you write for the Mutual Fund Investment will ensure that all your money value written on the check actually goes into your investment