The assets under
management of direct plans in equity funds too has grown from Rs. 2,700 crore
in March 2013 to Rs. 7,818 crore in March 2014.
Direct plans are
increasingly becoming popular among investors.
The
assets under management in direct plans of equity funds have nearly trebled from
Rs. 2,700 crore in March 2013 to Rs. 7,818 crore in March 2014, shows CRISIL
data.
However,
the AUM of direct plans in equity funds still constitutes a fairly small
percentage of the overall equity assets. Out of the Rs. 2 lakh crore equity
assets as on March 2014, 96% assets were managed by distributors while 4% or
Rs. 7,818 crore was in direct plans.
In
equity funds, distributors said that it is largely HNIs who have moved to
direct plans and not retail investors. A recent data released by AMFI showed
that HNI folios in equity funds have increased. “There is some migration of
HNIs in direct plans in equity funds. Institutions were investing directly when
there were entry loads,” said Vinod Jain of Jain Investments.
Vinod
believes that distribution led business will grow as equity markets revive.
“You need distributors to bring new investors in equity funds. Institutions
will continue to invest in direct plans as long as the option of direct plans
is open,” he added.
The assets in direct plans have increased in all categories of
schemes. Short term and long term debt funds also saw threefold growth in
direct assets.
FMPs and liquid funds had the largest share
of direct assets. From Rs. 8,700 crore in March 2013, the assets in direct
plans of FMPs increased nine times to Rs. 79,914 crore in March 2014. Out of
the total 1.55
lakh crore assets under FMPs, 52% is invested through direct channel while the
remaining was routed through distributors.
Suresh Soni, Managing Director & CEO, Deutsche Mutual Fund
said that corporate investors have shifted to direct plans in liquid funds and
FMPs. “There has not been any remarkable change in investors behavior as far as
equity funds are concerned. A large portion of assets is still channelized
through distributors. FMPs and liquid funds have seen highest increase in
direct assets.”
Direct plan assets under
management
Category
|
Direct AUM March 2013
|
Direct AUM March 2014
|
Change %
|
Change absolute
|
Equity
|
2700
|
7818
|
190%
|
5118
|
Liquid/Money market
|
79600
|
136965
|
72%
|
57365
|
Ultra short term
|
19700
|
30845
|
57%
|
11145
|
Short term debt
|
4500
|
16473
|
266%
|
11973
|
Long term debt
|
5200
|
15416
|
196%
|
10216
|
Gilt
|
1000
|
1856
|
86%
|
856
|
FMPs
|
8700
|
79914
|
819%
|
71214
|
Other debt-oriented
funds
|
5300
|
5586
|
5%
|
286
|
Gold ETFs
|
0
|
NA
|
||
Others
|
0
|
NA
|
||
Total
|
126700
|
294873
|
133%
|
168173
|
Source : CRISIL (Rs. cr)
|
||||
“Those who had to move have already moved to direct plans. A
majority of these were corporate investors. Large corporates are investing in
direct plans. However, the smaller and mid-sized companies are still investing
through distributors. The assets under management in direct plans have grown
because both debt and equity have done well. People are attracted to direct
plans because there’s a clear return differential. However, they may miss out
on opportunities if they don’t have access to distributors advice. It is not
possible for treasury team to talk to 44 fund houses. However, distributors are
capable of providing timely advice which would greatly benefit corporate as
opposed to the small difference in returns they get from direct plans. The AUM
in direct plans may grow further but if the funds don’t perform well they may
return to distributors,” said Hemant Rustagi of Wiseinvest Advisors.
Experts feel that as markets become complex and opportunities grow
corporate investors will turn to distributors for advice. “I feel investors
will be ready to bear a small cost for the advice they’ll get from investors. A
large portion of assets will continue to be routed through distributors as
investors need handholding and advice,” said Hrishikesh Parandekar, CEO &
Group Head, Broking, Wealth Management, & Asset Management, Karvy.
However, some feel that savvy investors who are aware of the
benefits of direct plans will continue to invest in direct plans. “I think the
assets will grow further as the market expands. Companies which have a treasury
team will continue investing in direct plans,” said D P Singh, Executive
Director, Chief Marketing Officer (Domestic Markets), SBI Mutual Fund.
Direct plans were mandated by SEBI in January 2013. Overall, the
direct plans now constitute 33% of the total industry AUM. The AUM of direct
plans has increased 133% from Rs. 1.26 lakh crore in March 2013 to Rs. 2.94
lakh crore in March 2014.
