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A recent research report by AMFI and CRISIL Intelligence reveals that MFDs/RIAs create long term investors for the MF industry compared to direct plan platforms.
The data shows that 15.7% of the total MF AUM has stayed invested for over 5 years in March 2024. The proportion of long-term MF AUM has increased from 6.5% of the total MF AUM in March 2019.
|
Year/Holding period |
Less than 1 year |
1-5 years |
More than 5 years |
|
March 19 |
49.4% |
44.1% |
6.5% |
|
March 22 |
43.7% |
46.6% |
9.7% |
|
March 24 |
34.4% |
50.0% |
15.7% |
Interestingly, the report highlights that investors who invest with guidance from MFDs and RIAs tend to hold their investment for a longer period of time compared to the investors coming through the direct plans.
The share of regular investments or the investors coming through MFDs and RIAs with more than 5 years of holding period was at 21.2% as against 7.7% in direct plans in March 2024.
Further, in case of regular and direct SIP AUM, 23% of investments through regular plans have a holding period of more than 5 years compared to 12.4% of the AUM through the direct plans
Here are other key trends:
- The share of AUM for holding periods between 3 and 5 years doubled from 8.8% to 17.7% between March 2019 to March 2024
- The share of AUM for holding periods of more than 5 years was higher for equity funds, at 18.7% and 20.6% for the holding periods between 3 and 5 years.
- The share of SIP AUM with a holding period of more than 5 years in March 2024 has grown to 21% compared to 12% in March 2019. Let us look at the table to know more
|
Holding period/year |
March 2019 |
March 2024 |
|
Less than 1 year |
46.4% |
28.0% |
|
1 to 5 years |
41.6% |
51.0% |
|
More than 5 years |
12.0% |
21.0% |
Let’s have a look at the holding period table:
March 2019
|
Investment type/Holding period |
Less than 1 year |
Between 1 to 5 years |
More than 5 years |
|
Industry AUM-Direct |
59.9% |
38.8% |
1.3% |
|
Industry AUM-Regular |
43.0% |
47.3% |
9.7% |
|
Direct SIP AUM |
53.9% |
43.1% |
3.0% |
|
Regular SIP AUM |
45.5% |
41.4% |
13.0% |
March 2024
|
Investment type/Holding period |
Less than 1 year |
Between 1 to 5 years |
More than 5 years |
|
Industry AUM-Direct |
40.9% |
51.4% |
7.7% |
|
Industry AUM-Regular |
29.8% |
49.0% |
21.2% |
|
Direct SIP AUM |
33.8% |
53.8% |
12.4% |
|
Regular SIP AUM |
26.6% |
50.4% |
23.0% |
The factbook said, “Regular investments have a longer holding-period profile in comparison to direct investments. As of March 2024, the share of regular investments with more than 5 years of holding period stood at 21.2% as against 7.7% in case of direct investments. A similar observation can be made for data pertaining to March 2019. This reflects that the impact of guidance given by intermediaries has been helpful in fostering long-term investor discipline historically. However, it must be noted that the direct plans were introduced only in 2013 and hence holding periods of direct investments is still evolving.”
“A similar trend is observed for holding periods of direct and regular SIP AUM, where 23.0% of investments through regular plans have a holding period of more than 5 years against 12.4% of direct plans,” it added.
