When you think of investing in mutual funds, you can opt to buy the same fund in a direct way or the regular way from the IFA. However, as these days direct plans are being marketed as superior to the regular plan, which they indeed are. DSIJ unveils how direct plans actually fair when compared to regular plans from IFAs.
The Securities and Exchange Board of India (SEBI) had directed fund houses to launch a direct version of the funds in the year 2013. Since then, you can see that a fund has two plans. One being the 'Direct' and other being the 'Regular', which is purchased through distributors. Direct plans remain the favorite of institutional investors, while the retail investors are still wary of investing through a 'Direct' plan. As of April 2019, the total AUMs (Assets Under Management) of the mutual fund industry stood at 25.28 lakh crore. The 'direct' mode constitutes 41 percent of the total assets of the mutual fund industry, which constitute both institutional and retail. Most of this comes from institutional investors. A large proportion of direct investments were in non-equity oriented schemes, where institutional investors dominate. Our analysis shows that less than five percent of the total assets of MFs are invested by retail investors in equity-dedicated funds. This shows that the direct plans still have to find acceptance among the retail investors, despite its benefit over the regular plan. One of the reasons for such a lower penetration of direct plan among retail investors is the lack of awareness among retail investors.
When it comes to direct plans, the intention of SEBI was to lower the transaction cost, bring more transparency and reduce chances of misspelling. The direct fund was mainly focused on offering knowledgeable and sophisticated investors a low-cost product. As direct plans do not involve any commissions whatsoever, these plans have a lower expense ratio than the regular plans, which consider the agent's commission in the expense ratio. Though SEBI has taken various initiatives with respect to the advertisement codes and sponsorships, there is still a need to think on various loopholes that come with direct plans.
The Study
この記事は Dalal Street Investment Journal の June 10, 2019 版に掲載されています。
7 日間の Magzter GOLD 無料トライアルを開始して、何千もの厳選されたプレミアム ストーリー、9,000 以上の雑誌や新聞にアクセスしてください。
すでに購読者です ? サインイン
この記事は Dalal Street Investment Journal の June 10, 2019 版に掲載されています。
7 日間の Magzter GOLD 無料トライアルを開始して、何千もの厳選されたプレミアム ストーリー、9,000 以上の雑誌や新聞にアクセスしてください。
すでに購読者です? サインイン
How To Invest In An Ageing Bull Market
Bull rallies (periods when stock prices rise) and bear declines (periods when stock prices fall) are natural parts of stock market cycles, but they don't follow a fixed timeline.
Should You Entrust All Your Money To A Single AMC?
If you are a market participant, you have probably heard the quote 'don't put all your eggs in one basket', which suggests diversification. Investors often focus on diversifying across categories like large-cap, mid-cap and small-cap, but they may unintentionally overlook diversification across different AMCs. The question arises: is AMC-wise diversification really necessary? Rakesh Deshmukh takes a closer look at this scenario
Wild Swings Engulf Global Equities
U.S. stock markets experienced significant volatility. An early-week rally pushed the markets to new highs, but this momentum faded, primarily due to weaknesses in the tech sector. The major indices had a mixed finish with, S&P 500 and Nasdaq closed lower, while the Dow recorded a notable gain.
U.S. Elections and China's Economy Hamper Commodities
Commodity markets experienced selling pressure in the last fortnight, driven by uncertainties surrounding the upcoming U.S. presidential elections, concerns about the Chinese economy, and increased agricultural production in Brazil.
Wealth Building For Retirement Through Mutual Funds
Retirement is one of the most crucial and lifechanging phases. It marks a period where maintaining your lifestyle becomes paramount even though your regular income stops.
Mastering Investment with Information Ratio
Information Ratio helps in navigating the complexities of the investment landscape by assessing an active fund manager's performance. And though it has its limitations, it remains an essential part of the finance industry. The article explains what Information Ratio is and how investors can use it as another tool
Plan To Be Financially Independent
Each of us aspires to be financially independent as it ensures having enough resources to be self-sufficient and control our finances.
❝Technology is the new game-changer"
With a new breed of young investors entering the financial markets, it is the use of technology that is increasingly playing a major role in how investments are done and tracked. Anand Radhakrishnan, Managing Director, Sundaram Mutual Fund, shares his opinion about how this factor is turning into a significant tool and how it will shape the strategies of his company
What If Donald Trumps?
The potential election of Donald Trump as president in the U.S. carries significant implications for the Indian equity market. It could lead to changes in the global trade dynamics, in particular affecting the Indian IT sector while also raising inflation levels and leading to yet another revision in the visa programme for Indians who want to work in the US. The article takes a closer look at what may lie in store
Sectoral Gains Make A Mark
Benchmark indices continued their uptrend, reaching new record highs, although the pace has slowed as the broader markets faced selling pressures
