The latest data released by AMFI shows that direct plan in equity funds account for 19% of the industry assets while direct plans in debt funds and liquid/money market funds constitute 57% and 76% of the total assets respectively.
Ajit Menon, CEO, PGIM India MF feels that direct plans are gaining traction due to fintech platforms. “Many millennials have started their investing journey with online platforms largely due to the ease of investment that these platforms offer. The proportion of direct plan in the total equity AUM will go up in future considering the growing awareness of mutual funds in India. However, majority of retail investors still prefer MFDs/advisors to invest in equity funds as they find it difficult to select funds, review portfolio and evaluate risk,” he said.
Overall, the proportion of direct versus regular AUM in the MF industry stands at 47:53 as on November, 2020. This is due to the higher participation of institutional investors in debt funds through direct plans.
AMFI data shows that individual investors continue to invest in regular plans with the help of MFDs. While 15% of the retail assets is direct, 24% of HNI assets is direct.
Bangalore MFD Srikanth Matrubai of Srikavi Wealth believes MFDs should focus on strengthening their relationship with clients to deal with direct plans. “In my view, MFDs should handhold their clients especially during difficult times. A proactive approach is always better than a reactive one. In addition, MFDs can offer multiple products and services to get a larger share of their clients’ wallet,” said Srikanth.
