Paisabazaar.com: Consumers lack Mutual Funds awareness

Paisabazaar.com, India's largest marketplace for lending and investment products, said today that 96% of its consumers were not aware of the existence of direct plans of mutual funds, a survey conducted by it had revealed. Compared to regular plans, direct plans of mutual funds offer higher returns, since it does not involve any commission or distribution fees. The survey, which had over 25,000 respondents, was conducted for all non-mutual fund consumers of Paisbazaar.com last month.

"While everyone in the industry is aware that direct plans offer better returns than regular plans, there's hardly been any consumer awareness initiative around it. As a consumer brand, we believe in offering what's best for our customers, whether it's free credit score or direct plans of mutual funds. The challenge is to make consumers aware of the distinct advantage direct plans have in the form of higher returns," said Yashish Dahiya, Co-founder & CEO, PolicyBazaar Group, the parent company of Paisabazaar.com, Policybazaar.com and Docprime.com.

Paisabazaar.com said that the difference in returns between direct plans of mutual funds and regular plans will amount to a whopping Rs. 68 lakh, for a SIP of Rs. 10,000 for 25 years, at an annualized return of 15%. (Corpus created through direct plans will be Rs. 3.97 crore Vs Rs 3.29 crore via regular plans)

"So, while a commission of 1%-2% in regular plans may seem insignificant initially, returns from direct plans can easily be 18%-20% higher in the long run," added Yashish Dahiya.

Paisabazaar.com, since the launch of direct plans of mutual funds on its platform, has run continuous consumer awareness campaigns around it. This has also led to a wave of consumers coming to the platform to invest in direct plans, predominantly from Tier 2 & Tier 3 cities.

"67% of the mutual fund investors on Paisabazaar come from outside Top 30 cities, with a median age of the total investor base at only 29 years. 47% of them are first-time investors. This conveys a simple message - Today, consumers, from across age bands and geographies, are getting more and more confident in buying financial products on their own," said Naveen Kukreja, CEO & Co-founder, Paisabazaar.com.