Why You Need a Mutual Fund Distributor and Not Just DIY Apps
- AssetPlus Editorial Team
- Aug 19
- 6 min read
Updated: Aug 29
In the age of smartphones and instant investing, opening a mutual fund account has never been easier. With a few taps on a DIY (Do-It-Yourself) investment app, you can start an SIP, redeem units, or switch funds anytime.
But here’s the catch - easy access doesn’t always mean smart investing.
Imagine this: You download an Assetplus Partner App, choose a top-rated mutual fund based on last year’s performance, and start an SIP. Six months later, the market dips, your portfolio shows a loss, and you panic. You stop your SIP and withdraw - locking in the loss.
This is where having a Mutual Fund Distributor (MFD) makes all the difference.
Let’s explore why depending solely on DIY apps can be risky, and why having an MFD can lead to better investment outcomes.
The Rise of DIY Investing in India
Over the last few years, India has seen a massive shift toward digital investing:
As per AMFI data, SIP accounts crossed 8 crore in 2025, many of them opened via mobile apps.
New-age fintech platforms make it possible to invest in just a few minutes without paperwork.
Social media and YouTube are flooded with “top 5 funds to buy now” videos.
While this accessibility is great for financial inclusion, it has also created a false sense of confidence. Many new investors think mutual fund investing is only about picking a few top funds from a list — but in reality, that’s just the tip of the iceberg.
The Gaps in the DIY Approach
DIY apps give you tools, but they don’t give you a strategy. Here are common pitfalls of going solo:
Over-reliance on Past Performance
Many investors simply pick funds based on last year’s returns, ignoring factors like risk profile, consistency, and market cycle.
Lack of Goal Alignment
Without a clear investment goal, you may choose a 3-year debt fund for a 10-year goal or an aggressive equity fund for a 1-year need.
Emotional Decisions
Market volatility often leads to panic redemptions or impulsive switches.
Ignoring Tax Implications
DIY investors sometimes redeem without realising the capital gains tax impact, reducing overall returns.
Poor Portfolio Monitoring
Once the investment is made, many investors forget to review, rebalance, or adjust to life changes.
What a Mutual Fund Distributor Brings to the Table
A Mutual Fund Distributor is not just someone who “executes” your investments. They play a strategic advisory and support role throughout your investment journey.
1. Goal-Based Planning
MFDs help you define financial goals — buying a house, children’s education, retirement — and align your mutual fund portfolio accordingly.
Example: Instead of putting all your money into equity funds because they “give better returns,” your MFD might allocate part of it into debt funds for stability and liquidity.
2. Risk Profiling and Fund Selection
Every investor has a unique risk appetite. An MFD ensures your investments match both your financial capacity and emotional tolerance for risk.
DIY apps might show you 50 equity funds, but your MFD will narrow it down to the 4–5 that fit your risk profile, investment horizon, and tax efficiency needs.
3. Behavioural Coaching
One of the most underrated roles of an MFD is keeping you invested during tough times.
When markets fall, many DIY investors exit prematurely, turning temporary paper losses into permanent ones. MFDs act as a calming voice, reminding you of the bigger picture and historical market recoveries.
4. Portfolio Monitoring and Rebalancing
Markets, fund performance, and your life circumstances change. MFDs review your portfolio regularly, shifting allocations when necessary.
For example, if a fund’s strategy changes or its risk-adjusted performance drops, an MFD will recommend a switch — something you might miss in a DIY setup.
5. Administrative Convenience
From setting up SIPs to helping with KYC, nominations, and redemptions, MFDs handle the operational side so you can focus on your goals.
They also assist with account transfers, consolidation of folios, and even claim settlements for nominees — support that apps simply can’t offer.
6. Education and Awareness
An MFD educates you on concepts like asset allocation, taxation, and compounding — empowering you to make informed decisions instead of chasing quick returns.
DIY Apps vs. Mutual Fund Distributors – A Side-by-Side View
Aspect | DIY Apps | Mutual Fund Distributor |
Onboarding | Quick, self-driven | Guided with personalised setup |
Fund Selection | Based on ratings & past returns | Based on goals, risk profile, and strategy |
Market Volatility Support | No personalised advice | Hand-holding and behavioural coaching |
Portfolio Monitoring | Manual effort by investor | Regular reviews and rebalancing |
Tax Planning | Limited calculators | Holistic tax-efficient strategies |
Problem Resolution | Self-service via app support | Direct assistance and follow-ups |
Emotional Discipline | Dependent on investor | Guidance during panic phases |
The Cost Factor – “But Apps Are Free!”
Many investors think going DIY saves money because apps are “free.” But here’s the reality:
Both MFD-assisted and direct-invested mutual funds charge Expense Ratios.
Direct plans (offered via apps) have a slightly lower expense ratio, but this saving can be easily offset by poor decisions, wrong fund choices, or untimely exits.
A good MFD can help you earn better risk-adjusted returns over time — which can be worth far more than the 0.5–1% expense ratio difference.
A Real-Life Scenario
Scenario 1 – DIY Approach
Ramesh, a 28-year-old software engineer, started an SIP in 2021 in a “top-performing” equity fund via an app. In early 2022, the market fell, and his portfolio was down 12%. Panicking, he stopped his SIP and withdrew his money. Two years later, that same fund had recovered and delivered 15% annualised returns — returns Ramesh missed out on.
Scenario 2 – With an MFD Priya, also 28, invested the same amount in a diversified portfolio through her MFD. During the dip, her MFD explained market cycles, advised her to continue SIPs, and even suggested adding more. By 2024, Priya’s portfolio not only recovered but outperformed Ramesh’s by a large margin.
When You Might Still Use DIY Apps
MFDs and DIY apps are not mutually exclusive. In fact, many MFDs also use digital platforms to execute and track investments for clients.
DIY apps work well if:
You have strong financial knowledge and discipline.
You have time to monitor and rebalance your portfolio.
You’re investing small trial amounts to learn.
But for most investors — especially those with serious financial goals — expert guidance beats pure DIY.
Final Thoughts
DIY investing apps have made mutual funds accessible to millions of Indians — and that’s a great thing. But access without guidance can lead to poor decisions, emotional investing, and missed opportunities.
A Mutual Fund Distributor brings:
Personalised strategies.
Risk management.
Behavioural guidance.
Portfolio monitoring.
Administrative support.
While apps give you the tools to invest, MFDs give you the wisdom to invest right. The cost difference is minimal compared to the potential long-term benefits.
If you’re serious about creating wealth, it’s worth having an MFD by your side — not just an app on your phone.
Frequently Asked Questions (FAQs)
Are Mutual Fund Distributors regulated in India?
Yes. MFDs must be registered with AMFI (Association of Mutual Funds in India) and hold a valid ARN (AMFI Registration Number). They follow SEBI and AMFI regulations to ensure ethical conduct and investor protection.
What’s the difference between an MFD and an RIA (Registered Investment Advisor)?
An MFD can recommend and distribute mutual funds but typically earns a commission from AMCs (Asset Management Companies).An RIA charges a direct advisory fee from clients and is not allowed to earn commissions on product sales.
Do I pay extra for using an MFD compared to a DIY app?
MFDs distribute regular plans, which have slightly higher expense ratios than direct plans. The difference (around 0.5–1% annually) is paid to the MFD by the AMC. You don’t pay extra out of pocket — it’s built into the fund cost.
Can MFDs help me with tax-saving investments?
Absolutely. MFDs can guide you toward ELSS mutual funds for Section 80C deductions and help structure your portfolio for better post-tax returns.
If I start with an MFD, can I later switch to DIY investing?
Yes. You can switch between regular and direct plans or even manage your own portfolio later. However, switching may have tax implications and exit loads, so consult your MFD before making the change.