Although the average assets under management (AAUM) in direct plans of equity funds has gone up by 63% from Rs 2,700 crore in March quarter to Rs 4,400 crore in June quarter, it is still a small percentage as compared to the overall shift of institutional money in debt funds, shows a CRISIL study. The data suggest that the quantum of shift to direct plans is much higher in the debt fund category.
Debt-oriented mutual funds constitute 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 quarter from Rs 24,400 crore in March quarter. A large part of the shift in AUM in direct plans of debt funds is from institutional investors.
Direct investments AAUM touched Rs 2.14 lakh crore in April-June 2013, up 70% from Rs 1.27 lakh crore over the March quarter. Direct plans now constitute 25% of the total industry AAUM against 15% in the previous quarter.
According to Sandeep Sabharwal, Senior Director-Capital Markets, CRISIL more investors could starting to direct plans. “Higher returns from direct plans are the outcome of lower expense ratio for these plans as distribution costs are excluded. In future, more institutional investors and high net-worth individuals are likely to shift to direct plans as these investors are far more capable at taking informed investment decisions. Retail investors too could start shifting to these plans as awareness about the benefits of these plans increases. Retail investors can use mutual fund rankings in the public domain and invest directly in top ranked funds,” says Sabharwal.
Direct plans were launched from 01 January, 2013. As the total expense ratios (TER) of direct plans are lower, these funds have outperformed regular plans. A comparison of returns between direct and regular plans for the quarter ended June 2013 reveals that the long term income funds category outperformed by 0.76% on an annualized basis followed by equity linked savings scheme (ELSS) which outperformed by 0.65%. Monthly income plan – conservative category with a performance margin of 0.64% was a close third.
|
Equity Category |
Jan - Mar 2013 |
Apr-Jun 2013 |
|
Direct Plans Average AUM (Rs cr.) |
2700 |
4400 |
|
Total Average AUM (Rs cr.) |
208600 |
198600 |
|
Direct Plans as a % of total equity average AUM |
1.27% |
2.22% |
|
Source : CRISIL |
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