Investors of equity funds prefer taking the help of advisors for their investments. AMFI data shows that of the total equity AUM of Rs7.03 lakh crore, Rs5.84 lakh crore came from regular plans in equity funds in May, i.e., 84% of overall equity AUM. Equity funds include pure equity, balanced, ELSS, and equity ETFs.
AUM under regular plans increased 50% or by an impressive Rs2 lakh crore in a year, shows AMFI data.
Experts say that advisors help investors identify financial goals and handhold them throughout the term of their investments.
“Mutual funds have been around for over 30 years; however, many people are still not aware of it. These people need advisors who can guide them on how to go about investments,” says Suresh Soni, CEO of DHFL Pramerica Mutual Fund.
Seconding Suresh’s view, Srikanth Meenakshi, co-founder and COO of FundsIndia.com says, “This is healthy sign that investors are taking the help of an advisor to invest in mutual funds. Mutual funds are not a commodity like mobile or gold that people can buy on their own by doing research online. Advisors understand needs and goals of their clients and help them make informed decisions.”
AMFI data shows that the AUM of equity funds through direct plans has also doubled from Rs70,000 crore in May 2016 to Rs1.36 lakh crore May 2017. Experts attribute this growth to low base and emergence of online platform offering direct plans. They believe, though, that majority of investors would continue to prefer regular plans.
The COO of FundsIndia pointed out that investors who invest through advisors stay put for the long term. “Investors who invest through direct plans usually show irrational behaviour during volatility. In fact, an independent research shows that majority of direct plan investors redeem their investments during market corrections. This is not prevalent among investors who invest through advisors,” he says.
“Distributors should not worry about the increase in assets under direct plans. Penetration of mutual funds is low in India. There are still a lot of untapped markets which advisors can look into and expand their network,” the CEO of DHFL Pramerica MF adds.