A recent AMFI data on investor behavior has revealed that a mere of the investors in retail business invest through mutual funds in the year 2016-17. It has also been shown by the data that direct plans are used mostly by the institutional and corporate investors. The institutions and corporates use 80% and 60% of their total transactions through direct plans. In the financial year, 2016-17 direct investments accounted for 16.62% for HNIs.
The data has also shown the inflows in different scheme types and it has revealed that around 70% of the investment in ETFs and FOFs is through the direct mode. Direct mode is preferred in these scheme types over any other type of investment. The study has also shown that where institutional investors dominate around 68% of the money market scheme asset were direct. In other schemes such as equity and debt oriented schemes, direct investments accounted for only 15% and 47% of the whole investment made.
Mr. Sadique Neelgund of Network FP said that the two reason for this is following. The first reason is that the individual investors are dependent on advisors who advise them about which investments to be made. This way the investment is regularly monitored and properly taken care. On the other hand, the institutional investors have the proper resources by which they compare and evaluate the funds which are suited for their business.
Mr. Suresh Sadagopan of Ladder7 says that the different between direct and regular investment is huge in terms of the actual investments made. In the case of institutional investors the dedicated team behind the decision along with the knowledge which is present in-house, direct plans seem more viable and so they tend to lean that way for their investments. However, in the case of an individual or retail investors, it is solely based on the managing capacity of the distributor since the person investing doesn’t have very deep knowledge of the technicalities present in the investment process. If an individual doesn’t take help of the advisor, his investment is more likely to go through the regular channel.
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