Despite the correction in markets, self-directed investors continued to pour money in direct plans of equity funds. The latest AMFI data shows that direct equity assets have grown by 43% from Rs. 37,137 crore in March 2015 to Rs. 53,015 crore in March 2016.
Barring overseas fund of funds, direct plan assets across all categories showed a positive growth. The highest growth (43%) in direct assets was seen in equity funds, followed by balanced funds. The total direct plan AUM went up by 27% to Rs. 4.74 lakh crore in March 2016 from Rs. 3.73 lakh crore in March 2015.
Growth in direct plan AUM across different scheme categories
The above table shows how much each scheme category contributes to the total direct AUM. Not surprisingly, a large chunk of direct assets consists of debt funds.
While there has been a growth in absolute terms in total direct AUM, the proportion of AUM largely remains the same. This is because the overall industry assets have grown. G Pradeepkumar, CEO, Union KBC MF says, “The AUM of the total industry has grown because of which direct AUM will also grow. So direct AUM will grow in absolute terms.”
Participation by different categories of investors
Data Source: AMFI
Retail
Retail assets in direct plans increased to Rs. 27,163 crore (across all scheme categories) in March 2016, up 5% from Rs. 25,782.35 crore in March 2015, shows the latest AMFI data.
However, retail still constitutes a small part (6%) of the total direct AUM. This is because a majority of retail investors need handholding and guidance and thus continue to invest through distributors. “Retail investors need to take help of financial planners rather than taking their own decisions just to save money. The value provided by advisors makes up for the amount which can be saved by investing in direct plans,” adds Pradeepkumar.
HNIs
HNI AUM in direct plans grew by 25% last fiscal. They contributed Rs. 53,391 crore or 11% to the total corpus of direct AUM.
Will direct continue to grow?
With the emergence of online portals selling direct plans and ease in doing transactions, some feel that direct assets are likely to grow in future. “Investments through direct channels are bound to grow because people are getting tech savvy and more information is readily available. With the ease in doing KYC and preference for online transaction increasing, investing in funds has become much easier,” believes Kavitha Menon, a SEBI registered RIA. However, critics point out that providing technological ease to investors makes them redeem at their whim.
Nevertheless, experts say that while direct AUM is likely to grow further from here, distributors will continue to play an important role, especially in handholding retail clients.
