Distributors still command lion share in MF investments

Shashikant Singh
/ Categories: Mutual Fund
Distributors still command lion share in MF investments

Direct mutual fund plans were introduced by the market regulator, SEBI more than six year ago, in January 2013. SEBI made it mandatory for all mutual fund houses to launch ‘Direct Plans’ for all their schemes. Investing in direct plan of a mutual fund scheme helps an investor to eliminate the middle man and save on expense ratio. There is no guidance from any advisor and you invest based on your own research.

Despite all the awareness programme run by industry body AMFI and rising awareness about mutual funds, distributors still contribute most to the industry's assets. Almost 59 per cent of the total assets held by the MF industry come through MF Distributors (MFDs) and the rest 41 per cent comes through direct investment. A large proportion of direct investments are in non-equity oriented schemes where institutional investors dominate. Around 70 per cent of liquid and money market scheme assets where institutional investors dominates were direct. Since institutions and corporates invest majorly in debt-oriented schemes, 48 per cent of debt-oriented scheme assets come through direct route. In case of equity-oriented schemes, where retail investors form major share of the assets, only 12 per cent of the retail investors chose to invest directly, while 22 per cent of HNI assets were invested directly.

If we look in terms of location, T30, i.e., top 30 geographical locations in India and B30, beyond the top 30, still have the major share of investments in mutual funds. Almost 85 per cent of the total asset still originates from T30 cities.

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