Over 70% of the new direct folios have been activated by RIAs

RIAs have a lion share in direct folio creation shows recent CAMS data. Of the total 1.35 lakh new folios created under direct plan in May 2019, 72% that is 97,741 were through the RIA channel.

CAMS covers 68% of industry data.

On category basis, RIAs have activated 82,789 equity folios, 9,522 debt folios and 5,430 folios in hybrid funds.

Experts attribute the increase in the number of new folios to the rise in the number of RIAs, especially online distributors like ETMoney and Paytm Money who offer operational convenience and cost effective investment option to new investors.

Folios

  Source: CAMS

However, if we analyse gross sales then RIAs contribute 25% of the direct sales in mutual funds. Typically, direct investments come through three channels, institutional direct, retail direct and RIA direct. RIAs further fall in two categories says Suresh Sadagopan of Ladder7 Financial Advisories. Fee based financial advisors who tend to have HNI and UHNI clients and online RIAs who mainly cater to retail clients. Investments by institutional investors and family offices tend to be large ticket investments. In comparison, majority of the investors coming on online RIA platforms are retail investors with smaller ticket size. This leads to the mismatch between, the gross sales through RIA (25% of total direct sales) compared to the number of folios (72% of total direct folios) activated by them.

Category-wise, under equity flows, RIAs brought in Rs. 145 crore of SIP and Rs. 531 crore of lumpsum investments.  Meanwhile under debt and hybrid categories, they brought in investments of Rs. 3,769 crore and Rs. 1,049 crore respectively.

Gross Sales

Source: CAMS