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    Are more mutual fund investors shifting to direct plans for extra returns?

    Synopsis

    Direct mutual fund plans have managed to corner a market share of a little over 40% in the last six years. Mutual funds had introduced direct plans of schemes six years ago as per Sebi directive.

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    According to the recent Amfi data, direct mutual fund plans have managed to corner a market share of a little over 40% in the last six years. Mutual funds had introduced direct plans of schemes six years ago as per Sebi directive. According to mutual fund advisors, many new investors are increasingly flocking to direct plans due to the extra returns posted by these schemes and due to the convenience of investing online or through mobile applications.

    For example, Axis Bluechip Fund - Direct Plan, the topper in the large cap category, is offering 26.72% returns in the last one year. The regular plan of scheme is offering 25.14% during the same period. In three years, the direct plan of the scheme is offering 16.37%, whereas the regular version is returning 14.89%. In five years, JM Core 11 Fund - Direct Plan is the topper in the category with 13.35% returns. Its regular plan is offering 11.71% returns in the same period. This trend is visible across equity mutual fund categories.

    Mutual fund advisors say that the difference in the returns of these schemes is because of the difference in charges levied by the direct and regular plans of the schemes. “The schemes have no difference in investment style. The difference in charges, over the years becomes big with compounding. That is why the direct plans score over the regular ones. These schemes rank above the regular plans in the charts and attract new investors,” says Puneet Oberoi, Founder, Excellent Investment Advisors.

    Things You should consider
    • Annualized Return
      for 3 year: 13.13%
    • Suggested Investment
      Horizon: >3 years
    • Time taken to double
      money: 4.11 Years
    JM Core 11 Fund-Growth ★★★★★
    Things You should consider
    • Annualized Return
      for 3 year: 2.19%
    • Suggested Investment
      Horizon: >3 years
    • Time taken to double
      money: 4.3 Years
    Mutual fund managers are a bit wary of talking about the trend.
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    9 Comments on this Story

    Sumit Gugnani397 days ago
    Good article and information about MF
    Samarth397 days ago
    Nice article.
    Chethan R399 days ago
    in direct you will get extra .5% returns but u won’t get financial advice. chances of getting vanished if u invest without any knowledge..
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