Listen to this article
An analysis of AUM data reveals that regular plans of mutual funds account for 76% of the total assets of individual investors as on June 2023. Of the total assets of Rs.25 lakh crore of individual investors, Rs.19 lakh crore has been invested in mutual funds through regular plans.
Further analysis shows that regular plans contributed 80% of the total individual equity assets. Such a contribution is 65% in debt funds, 53% in liquid fund and 42% in passives.
Experts attribute the preference of regular plans among individual investors to MFDs’ alpha. Akhil Chaturvedi, Chief Business Officer, Motilal Oswal Mutual Fund feels that many individual investors prefer investing through distributors as they bring a lot of value through their services. He said many MFDs offer host of services like tax planning, estate planning and so on which give them advantage over direct players.
Sandeep Bagla, CEO, Trust Mutual Fund says,” Many individual investors do not mind paying higher fee in regular plans compared to direct plans due to handholding of MFDs. Many MFDs help clients achieve financial goals and overcome behavioral biases.”
Let’s look at the table showing percentage of assets from direct and regular plans.
|
Regular plan |
% assets from regular plans |
Direct plans |
% assets from direct plans |
|
Equity |
80% |
Equity |
20% |
|
Debt |
65% |
Debt |
35% |
|
Liquid/money market |
53% |
Liquid/money market |
47% |
|
Passives and FoFs |
42% |
Passives and FoFs |
58% |
|
Total regular plan |
76% |
Total direct plan |
24% |
