A HDFC Securities report also said that although there is an increase in direct equity AUM over the years, the pace of growth is slow
Moneycontrol News
Motilal Oswal Mutual Fund has the highest share of direct assets of 36.6 percent in the industry, according to HDFC Securities report covering 10 fund houses.
However, past data shows the share of the direct plan in total assets of Motilal has declined from 39.9 percent in FY16 to 36.6 percent in September 2018.
Kotak Mutual Fund follows Motilal with direct plans accounting for 25.5 percent.
In the report, HDFC Securities noted despite an increase in direct equity AUM over the years, the pace of growth is slow.
The 10 fund houses covered in the report were HDFC, ICICI, SBI, Aditya Birla, UTI, Franklin Templeton, Axis, Reliance Nippon, Kotak and Motilal Oswal.
Generally, institutional investors tend to invest directly in debt while the majority of the retail AUM (assets under management) comes through the regular route.
As per AMFI data, a majority of the assets of Motilal Oswal MF are invested in equity which is around 95 percent as per September 2018 AMFI data. Thus, the majority of the direct assets of the fund house can be assumed to be in equity schemes.
This puts Motilal Oswal MF ahead of the industry average of around 11 percent in terms of direct equity assets as per September 2018 AMFI data.
Among the fund houses covered in the report, Axis MF (7.4 percent) and UTI MF (8.4 percent) have the lowest direct equity AUM. UTI MF, in fact, saw its direct AUM share drop significantly (33.2 percent in 2016 to 8.7 percent in 2018) in the last few years.
While direct assets of Franklin Templeton MF, HDFC MF, Motilal Oswal MF and SBI MF rose in the first nine months of 2018, for the others, direct assets remained steady during the period.
In absolute terms, HDFC MF, ICICI MF and Aditya Birla MF hold the top spots owing to their large asset base.
HDFC MF has the highest direct AUM of close to Rs 49,200 crore in September 2018, followed by ICICI MF with nearly Rs 47,000 crore and Aditya Birla Sun Life MF with around Rs 46,000 crore.
While direct plans have been around since 2013, they are yet to pick up. One reason for that is the crucial role played by distributors in educating clients and recommending them the most suitable products.
As per the report, 40 percent of debt AUM is sourced through the direct channel as institutional investors dominate the debt segment and they tend to invest through the direct plan. On the other hand, the majority of the equity AUM is still sourced by distributors. Though there has been an increase in direct equity AUM over the years, the pace of growth is slow.
Between March 2015 and September 2018, the share of direct equity AUM has risen by merely 5 percent (11 percent in March 2015 to 16 percent in September 2018).
According to Madhukar Ladha, analyst, HDFC Securities and the report’s author, despite direct AUM being more profitable, mutual funds have not promoted direct channel. Though direct plans would give fund houses better pricing power, aggressively promoting these plans is likely to upset the distribution community.Not sure which mutual funds to buy? Download moneycontrol transact app to get personalised investment recommendations.
