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The very first quarter after direct plans were launched has seen these capture a 15 per cent share of mutual funds’ assets under management. Most of this money has come in from institutional investors looking to save money they would otherwise have paid distributors, according to industry watchers.
A direct plan allows investors to put their money into a fund without the inter-mediation of a distributor. Since the money goes directly to the asset management company, the distributor’s commission is ploughed back into the investor’s kitty, resulting in a higher return than regular plans. But, distributors said retail had shown very little interest in opting for the direct route. “For retail investors, the process is somewhat cumbersome, as they are required to keep tabs on all their investments themselves. They do not mind paying a nominal fee in return for services like daily updation of portfolio performance and NAV changes,” said Hiren Dhakan, associate fund manager, Bonanza Portfolio.
He added their retail business had not been affected by the introduction of the direct investment route.
A CRISIL Research report noted that debt market investors have opted for the route.
“The latest AMFI data indicates that average AUM of direct plans was around 15 per cent of the industry AUM, majorly from debt-oriented funds,” it said.
The debt schemes of mutual funds are dominated by the institutional segment.
The report noted that Indian mutual funds’ average assets under management (AUM) rose by almost 4 per cent or nearly Rs 30,000 crore to Rs 8.16 lakh crore in the January-March 2013 quarter from Rs 7.87 lakh crore in the previous quarter as per the latest numbers released by the Association of Mutual Funds in India (AMFI). This is the highest level since September 2010 when AMFI started declaring quarterly average numbers and the fourth successive quarterly gain in AUM.
Long term debt and gilt funds were the gainers amongst the debt funds as investors bet on the Reserve Bank of India cutting interest rates.
“Assets of long-term debt funds rose by 35 per cent to around Rs 85,500 crore while those of gilt funds gained by 63% to Rs 7,800 crore during the quarter ended March 2013. On a year-on-year basis, the assets of these categories have risen by 345 per cent and 119 per cent, respectively,” said the report.
The AUM of equity funds was marginally down 1 per cent to Rs.2.09 lakh crore, while those of gold exchange traded funds rose 1 per cent to nearly Rs 12,000 crore in the quarter.
