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Individual MFDs hold a share of 16% in the total debt AUM, according to ‘MF Trend FY 2022-23’ a report of Bandhan MF.
The report further reveals that this market is largely dominated by direct players who have a 51% share as on March 2023. The second-highest share is that of bank/private client group at 24%. Individual MFDs come next as the third largest MF participants.
On a comparative basis, the share of direct plans remained the same and that of bank/PCG increased by 2% from FY 2021-22 to FY 2022-23. While the share of individual MFD also improved, the rise was marginal at 1%.
* Source: CAMs, MFDex, data as on FY 23
Sirshendu Basu, Head-Products, Bandhan MF said that the market share of distributors depends on their client segment. He explained, “Corporates largely invest in fixed income products to align with their internal mandates and they usually prefer direct platforms. Hence, you see direct plans dominate the debt market. On the other hand, MFDs predominately cater to retail investors and HNIs who essentially have their fixed income allocation met through traditional investments like bank deposits.”
What MFDs have to say?
Ashish Chadha of Chadha Investment Consultant
Talking about my total portfolio, fixed income forms 45%. The rationale here is to integrate debt and equity together for creating a balanced portfolio.
However, sharing my general views basis the interaction I have had with my fellow MFDs, debt products are less lucrative than equity largely due to the technicalities involved. It thus becomes difficult to explain the debt funds to clients and how it can help generate returns higher than bank FDs. Moreover, the commission here is also comparatively less than its equity counterpart.
Ashish Shah of Wealth First Portfolio Managers
My clients seek comfort in other fixed income products which offer assured returns like tax-free bonds, corporate fixed deposits and senior citizen pension schemes.
Shifali Satsangee of Funds Ve'daa speaks about the interest rate hike regime
FY 2022-23 witnessed an interest rate hike regime and thus it made sense to stay away from debt investing. However, as of now, interest rates appear to have peaked out and make debt markets a sweet spot. As the repo rate cuts take place eventually, there will be good market-to-market gains. Hence, looking at the current scenario, our focus on debt funds has increased.
