No, a Demat account is not required to invest in mutual funds in India. Instead, there are a number of other options, such as Asset Management Companies (AMCs) or offline distributors through which you can directly invest in mutual funds without opening a demat account.
Mutual Funds are collection of funds that are professionally managed by a fund manager. The manager allocates the assets in an effort to maximize investors' returns through income or capital gains. The portfolio of a mutual fund is set up and kept up to date in accordance with the stated investment goals in the prospectus.
No, you do not need a demat account to invest in mutual funds in India. There are several other ways to invest in mutual funds without opening a demat account.
But if you also want to invest in stocks, ETFs, bonds, or other securities with mutual funds, then you must have a demat account.
You can invest directly with the Asset Management Company (AMC) online or visit their office. You need to submit your documents for KYC verification, and after that, you can start your mutual fund investments.
There are several distributors of mutual funds that provide entirely online services. One benefit of investing through an online distributor is that you can view your entire portfolio of mutual funds in one place.
There are offline distributors, similar to online distributors, through which you can invest in mutual funds. However, offline distributors require a lot of paperwork, which is very time-consuming.
There is no need for a demat account if all you want to do is invest in mutual funds. However, a demat account enables you to invest in mutual funds as well as other securities like stocks and bonds.
Additionally, demat accounts offer all of your investments in one place without requiring physical paperwork.