Investors too can invest online directly through MF Utility

Distributors fear that their existing clients may start investing in direct plans.

Direct plans, which have been a cause of concern for distributors, will be available for investors on the upcoming MF Utility platform.

The platform is likely to be launched in June. MF Utility will be launched in two phases. It is not clear if direct plans would be available in the first phase itself.

Allowing direct investors in this platform has created anxiety among some mutual fund distributors. They fear that their existing clients may start investing in direct plans if the facility is provided in MF Utility.

“Those who have never invested in mutual funds may not go directly but those who are already investing through distributors may be attracted to direct plans,” said a Mumbai based distributor.

“Tech-savvy and sophisticated investors might go direct through MF Utility. If investors don’t find value with the distributor then those clients may go direct,” said Vinayak Sapre of VVS Ventures.

However, some say that it is too early to conclude if there will be a huge migration of investors to direct plans through MF Utility. “MF Utility is just an order routing platform. Retail investors need guidance and handholding. It will be useful for institutional investors who have shifted to direct plans. It will not impact us in a big way,” said C.R. Chandrasekar, Co-founder & CEO, Wealth India Financial Services.

So far direct plans are only available on AMC websites. Investors have to go on each AMC website to transact in direct plans. With the launch of MF Utility, all schemes of all fund houses will be available at the click of a button.

Direct plans were introduced in January 2013. The investments under direct plans have gone up substantially under debt funds. Equity funds have also seen some increase in direct investments, though the pie remains small.  

According to CRISIL, debt-oriented mutual funds constituted 98% of the total AUM under direct plans. A large part of the direct plan AAUM constitutes of liquid and ultra-short term debt funds. Investments in direct plans of liquid funds touched Rs. 1 lakh crore in June 2013 from Rs 24,400 crore in March 2013. A large part of the shift in AUM in direct plans of debt funds is from institutional investors.

The AUM in direct plans of equity funds went up by 63% from Rs. 2,700 crore in March 2013 to Rs. 4,400 crore in June 2013.

Direct AUM