Direct plans capture 15% of mutual fund AUM

Most of this comes from institutional investors who look to save month, they would otherwise give distributors

The very first quarter after they were launched has seen direct plans capture a 15% share of mutual funds’ assets under management(AUM).

Most of this money has come in from institutional investors who look to save money they would otherwise have paid distributors, according to industry watchers.

A CRISIL Research report noted that debt market investors have opted for the route.

“The latest AMFI data indicates that average AUM of direct plans was around 15% of the industry AUM, majorly from debt-oriented funds,” it said.

The debt schemes of mutual funds are dominated by the institutional segment.

A direct plan allows investors to put their money into a fund without the intermediation of a depository. Since the money goes directly to the Asset Management Company, the distributor’s commission is ploughed back into the investor’s kitty, resulting in a higher return than regular plans.

The report noted that Indian mutual funds’ average assets under management (AUM) rose by almost 4% or nearly Rs 30,000 crore to Rs 8.16 lakh crore in the Jan-Mar 2013 quarter from Rs 7.87 lakh crore in the previous quarter (excluding fund of funds) as per the latest numbers released by the Association of Mutual Funds in India (AMFI). This is the highest level since September 2010 when AMFI started declaring quarterly average numbers and the fourth successive quarterly gain in AUM.

Long term debt and gilt funds were the gainers amongst the debt funds as investors bet on the Reserve Bank of India cutting interest rates.

“Assets of long-term debt funds rose by 35% to around Rs 85,500 crore while those of gilt funds gained by 63% to Rs 7,800 crore during the quarter ended March 2013. On a year-on-year basis, the assets of these categories have risen by 345% and 119%, respectively,” said the report.

The AUM of equity funds was marginally down 1% to Rs.2.09 lakh crore, while those of gold exchange traded funds rose 1% to nearly Rs.12,000 crore in the quarter.