The share of direct plans as a percentage of overall equity and debt assets stood at 15.2 per cent and 62.3 per cent as on September 30, 2019. The share is up 9 percentage points and 15.6 percentage points, respectively, over a five-year period, but has not budged much in the past two years. The bulk of the money in debt assets is from institutional investors.
The percentage of direct investments in equity schemes may inch up further, with wealthy investors increasingly routing their money through registered investment advisers and wealth management firms.
Direct plans allow investors to bypass distributors and save on commission. These have a higher net asset value than regular plans, the expense ratio is also less. Investors can save 80-100 basis points in direct equity plans vis-a-vis the regular equity ones.
The Securities and Exchange Board of India has, time and again, expressed concerns over the muted response to these plans. In August, the regulator said the difference between regular and direct plans was not equivalent to the distribution commission in some schemes.