Yet To Get It Right

Over the years, the mutual fund industry has tried to innovate with its offerings. But other than direct plans, its track record here has so far been shabby.

The advent of direct plans has been the singular impactful innovation from an investor's standpoint. Introduction of international equity funds, which offer meaningful diversification to small investors, gets a green tick too. But the remaining innovations are a sea of red.

In the last two decades, AMCs have made repeated attempts to hawk complexity in the name of innovation. Net result? Cluttered product line-ups and fads that faded as quickly as they emerged.

In their zest to innovate, AMCs have not even spared the simple and effective concept of SIP, deforming it with layers of market timing.

Direct plans: A masterstroke

Born in January 2013, direct plans truly benefited investors by giving them the option to save on distributor commissions, thereby earning vital extra returns. SEBI, the market regulator, went a step further: it nudged the mutual fund industry to advertise these plans to benefit end customers. Before the advent of direct plans, investors had to invest in 'regular' mutual funds, even if they were investing without a middle person.