Of the total Rs. 3.20 lakh equity assets, retail and HNIs collectively held Rs. 16,000 crore in equity funds through direct plans as on December 2014.
Contrary to the popular belief that mainly institutional investors invest in direct plans, a recent data published by AMFI shows that individual participation in direct plans of equity funds is steadily growing.
Introduced just 2 years back, the participation of individual investors, which includes retail investors and HNIs, in direct plan equity funds stood at 5% as on December 2014.
Of the total Rs.3.20 lakh crore total equity assets, individual investors held Rs 16,000 crore in equity funds through direct plan as on December 2014. Earlier, Cafemutual had done an analysis of monthly AAUM disclosure which showed that retail investors have poured in Rs.11, 554 crore in equity mutual funds through direct plans, which was 50% of total equity AUM of Rs. 23,216 crore in direct plan as on October 2014.
CRISIL data shows that the AUM of direct plans in equity funds has gone up from Rs. 8,119 crore in March 2014 to Rs. 22,559 crore in December 2014. This figure includes contribution from institutional investors also.
Vishal Dhawan of Plan Ahead Wealth Advisors attributed this growth to increasing awareness about mutual funds. “A lot has been written about benefits of direct plan in media which has created awareness among people. Also, the NAV difference between regular plan and direct plan has been increasing steadily.”
A Mumbai based distributor told Cafemutual that a few AMCs have lowered expense ratios to less than a percentage and distributed higher dividends in direct to promote direct plans.
However, many industry experts said that a large portion of retail investors will continue to invest through distributors as they need handholding and advice. Earlier, Sudhakar Ramasubramanian, Managing Director, Aditya Birla Money said “The process of investing in mutual funds is not easy. Retail investors still don’t understand the complexities of funds, not to mention about direct plans. Investors who have a large sum to invest and are savvy have moved to direct plans. However, I don’t see en masse migration to direct plans in equity funds. Retail investors will not go out of their way to invest in direct plans to save just 0.50% as long they find value in distributor’s service.”
Overall, the participation of investors in direct plan of MF schemes stood at 36% as on December 2014. A large proportion of direct investments were in non-equity oriented schemes where institutional investors dominate.
Meanwhile, the data revealed that about 11% of retail investors chose to invest directly in mutual funds while HNIs participation in direct plan stood at 14%.
