3 ways to “SWITCH” your Regular plans to Direct Mutual Fund plans

You have imported your existing portfolio to Kuvera. The next step is to switch your Regular Mutual Fund plans to Direct Mutual Fund plans and stop paying commissions.

Switching away from commission laden Regular Mutual Funds used to be cumbersome with uncooperative brokers, and a lot of paperwork. We are changing that. We have made importing your existing portfolio and switching to Direct Plans easy. So easy that you have no excuse left to continue to pay expensive commissions.

 

First, things to watch for while switching from Regular Plan Scheme A to Direct Mutual Fund Plan Scheme B:

Short-Term Capital Gains Taxes: the selling of units of Scheme A will attract Short Term Capital gains tax if the units are held for less than 1 year for equity funds and 3 years for debt funds. STCG is calculated as 15% for gains in equity funds. If your investment is in loss then STCG is not an issue.

Long-Term Capital Gains Taxes: the selling of units of Scheme A will attract Long Term Capital gains tax if the units are held for more than 1 year for equity funds and 3 years for debt funds. LTCG is calculated as 10% of the gains for equity funds with an exemption on the first Rs 1 lakh of gains. If your investment is in loss then LTCG is not an issue.

Exit Load: the selling of units of Scheme A will attract exit load if the scheme charges exit load. Most schemes do not charge exit load after 1 year of holding the units.

Lock-in period: this applies mostly to ELSS schemes. If your ELSS units are within the 3-year lock-in, then the switch in such schemes is not allowed. Switch order placed in units under lock-in period will fail.

Keep the above list in mind, as you go through the 3 options you have to switch to Direct Mutual Fund plans on Kuvera.

 

Smart Switch:

The “Smart Switch” option shows you units that are outside the STCG window i.e 1 year for equity funds. Also note, most equity funds don’t charge an exit load post 1 year. If you use this option you have to only watch out for LTCG (till we add the LTCG calculation during switch itself).  LTCG is grandfathered till Jan 31st, 2018. So if you fund NAV is below Jan 30th NAV then LTCG will not apply. Further, you have a Rs 1 lakh exemption for LTCG taxes. You can enable “Smart Switch” by using 300 Coins.

Once enabled, this is how the page will look like –

Do It Yourself “Switch”:

You can find the “Switch” button when you click on any scheme name in the “Portfolio” tab. As the name suggests, this is a “Do It Yourself” option, so make sure you check for STCG, exit load, and LTCG before placing the switch order.

Use Systematic Transfer Plan (STP) to Switch to Direct Mutual Fund Plans:

Setting up an STP from Regular plan Scheme A to Direct Mutual Fund plan Scheme B is a smart way to switch over time. Say, you had a regular plan SIP in equity Scheme A and you ran it from Jan 2016 to May 2018. You learned about Kuvera and now want to switch to Direct Mutual Fund Scheme B.

A smart course of action would be to:

1/ Switch all units accumulated between Jan 2016 to Apr 2017 in one go (either calculate the units yourself or use “Smart Switch”).

2/ Setup an STP from regular Scheme A to direct Scheme B of the same amount as the SIP and run it for 12 months. So for the month of Jun-2018, the units bought in May-2017 will be switched through the STP transaction and so on and so forth.

This will automate your switch to match your buying schedule, which was monthly.

There you have it, three ways to switch to Direct plans and zero excuses to continue paying commissions. Switch today at Kuvera.in

FAQ1: If I switch my existing units to Direct plans will my SIP order with my current broker also switch automatically to Direct plan SIP on Kuvera?

No, the three ways to switch we have discussed above only switch your existing regular plan units to direct plan units. For your SIP’s you will need to take the two steps below:

1/ Set Mandate amount in your profile and complete the mandate setup process. You will need an active mandate to be able to place SIP order.

2/ START your direct plan SIPs on Kuvera in the same folio as your current plans and then STOP your SIPs with other platforms.

Ps: if your regular plan platform does not agree to stop your SIPs (saying you need minimum months etc), read this

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11 Responses

  1. Karthik Kanniyappan says:

    It would be really great if you could provide the Taxation component as well as part of the software which helps us to understand what would be the implication of STCG , LTCG and Grand Fathered Net tax which would need to be paid. This can be as part a report as well for easy understanding.

  2. Gopalakrishna says:

    The only problem with Switch is you lose the overall impact of your investment growth.

    I mean you invested in Fund A. Then switched to Fund B. After you switch, the investment cost for Fund B is your investment value of Fund A. Where as actually your cost (from investment perspective) is what you put in Fund A.

    If you could add a way to track this, that would be simply awesome. I perfectly understand if you cannot.

    • Gaurav Rastogi says:

      We do track it in your portfolio XIRR. Your portfolio XIRR captures realized and unrealized gains so you will see that a switch does not change the portfolio level XIRR.

  3. Laxmikant Nemade says:

    I am myself an IFA having client’s AUM of more than 11 Cr. operating via NSE Platform.
    I am having a portfolio of 1.0 Cr.plus in 6-7 AMC’s (of my own investment) mostly under Regular plan. I wish to switch the whole to some platform and to Direct plan. I Learn your platform charges no transaction fees irrespective of portfolio size. What other charges, if any, do you levy? Subsequently, I would like to open 4 more accounts of my family members under Kuvera. They too have quite good volume of existing AUM. You may send me contact number of your representative so that one to one talk can be done.

    • Gaurav Rastogi says:

      Thanks for reaching out Laxmikant. We do not charge any fees – we are the first completely free Direct Plan platform in the country.

      To move completely to Kuvera and to Direct plan, we recommend the following steps (entire process is online) –

      1/ Import your existing units to Kuvera so you can track them here

      Setup an account with Kuvera and complete KYC check and bank account set up.
      After logging in, please follow the steps in the Import Portfolio tab. Do read the “Import Portfolio” FAQ: https://kuvera.in/faq/import

      We read and process your Consolidated Account Statement in real time and you can start placing orders in the same folios as your current regular and Direct plans immediately.

      2/ Move your SIPs from current platform to Kuvera

      Set Mandate amount in your profile and complete the mandate setup process. You will need an active mandate to be able to place SIP order.
      Start your direct plan SIPs on Kuvera in the same folio as your current plans and then STOP your SIPs with other platforms. Ps: if your regular plan platform does not agree to stop your SIPs (saying you need minimum months etc), read this – https://blog.kuvera.in/how-to-stop-your-sip-when-your-distributor-refuses-to-stop-sip/

      3/ Switch your Regular plan units to Direct plan units – there are 3 ways that Kuvera makes it easy to switch from Regular plan units to Direct plan units. You can read in detail about them here – https://blog.kuvera.in/3-ways-to-switch-your-regular-plans-to-direct-mutual-fund-plans/

      Hope the above helps. Let us know at [email protected] if you get stuck on any step.

      As an IFA you can manage all your clients portfolio in Direct plans using our Managed Account feature as well – https://blog.kuvera.in/managed-accounts-link-and-invest-across-kuvera-accounts/

  4. Padmanabh Shenoy says:

    Hi Gaurav,
    Read your answer reg XIRR calcation for a regular fund importe into kuvera and switched to direct plan. But if an existing investment in a Direct Plan is imported into kuvera, will the XIRR be calculated from the date of first investment done on the AMC portal and will kuvera show these returns on the portfolio performance.

    • Gaurav Rastogi says:

      Yes, Padmanabh. We import at the transaction level, so it does not matter if it is a regular or a direct scheme. We will show XIRR from the first investment date.

  5. Padmanabh Shenoy says:

    Thanks Gaurav.

  6. Ravi says:

    Hi Gaurav
    While transferring from regular plans to direct plans, can I move to better performing funds on direct plans? In this context if I use the plans suggested by kuvera and How do I execute the same. Bit confused on this. It will be helpful if you could throw some simple steps

    • Gaurav Rastogi says:

      Yes Ravi, when you switch from an existing Regular plan you can switch to any Direct plans scheme in the same fund house. While placing the switch order we will ask you to select the switch in scheme – it can be any scheme within the same fund house and not just the Direct counterpart of the regular scheme you are switching.

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