A recent study conducted by Paisabazaar.com has found that 96% of non-mutual fund consumers are not aware of the existence of direct plans in mutual funds.
Paisabazaar.com conducted a survey on the popularity of direct plan among non-mutual fund investors last month. Over 25,000 such individuals responded to the study.
Yashish Dahiya, Co-founder & CEO, PolicyBazaar Group, the parent company of Paisabazaar.com said that there is a need to spread awareness about direct plans amongst investors. “While everyone in the industry is aware that direct plans offer better returns than regular plans, there's hardly been any consumer awareness initiative around it. The challenge is to make consumers aware of the distinct advantage direct plans have in the form of higher returns,” said Dahiya.
To put the return difference in perspective, the report shared an example of a Rs. 10,000 SIP invested through regular and direct plan for 25 years. Assuming 15% annualized rate of return, regular plan corpus would be Rs 3.29 crore compared to Rs. 3.97 crore created through direct plan. This is a difference of Rs. 68 lakh, claims the report. “So, while a commission of 1%-2% in regular plans may seem insignificant initially, returns from direct plans can easily be 18%-20% higher in the long run,” added Dahiya.
