Individual investors put nearly 83% of their total assets in regular plans, an indication that they prefer handholding by distributors. The rest 17% AUM of individual investors comes through direct plan, says an industry report by CRISIL and AMFI.
A lion’s share of individual investors’ assets coming via regular plan is understandable. This is because IFAs not only guide the average investor in scheme selection; they also handle operational works such as updating KYC as per latest norms, facilitating minor to major transfer, inheritance transfer and transaction processes.
Moreover, experts feel that with the recent revision in expense ratios, the difference between regular and direct plans is likely to reduce.
Individual vs institutional players
Highlighting other trends among individual investors, the report says that AUM of individual investors has surpassed AUM of institutional players in the past 5 years.
AUM of individual investors grew from Rs.4 lakh crore in March 2014 to Rs.14 lakh crore in June 2019, logging a 27% CAGR. Consequently, its share in the total AUM increased from 48% to 58%.
AUM of institutional investors, on the other hand, logged a slower 18.1% CAGR from Rs 4.3 lakh crore to Rs 10.2 lakh crore.
On the preference of asset class, the report said that individual investors deploy assets mainly in equity funds. As of June this year, 57.4% of individual investors’ AUM was in equity-oriented funds. Around 11.7% of individual investors’ AUM was in aggressive hybrid funds and 24.3% in debt funds and 6.4% in liquid/money market funds.
Institutional players, however, preferred the fixed-income segment, which constituted 77.2% of their assets. Around 21.4% of institutional investors’ AUM was in equity funds.
