A decade of direct mutual funds: Investors earn thousands of crores more by avoiding commissions on ET Money

New Delhi (India) : Direct Mutual Funds celebrated their tenth anniversary on January 1, 2023, allowing Indian investors to earn 1% more than regular funds by saving on commissions. ET Money, one of India’s largest wealth tech platforms that helps Indians manage over Rs.30,000 crores in mutual fund investments, has released a study to commemorate this historic reform’s impact on investors’ wealth.

According to the study, Indian investors who chose direct mutual funds over the last decade earned thousands of crores in additional returns. The findings are based on an examination of the return differences between direct and regular plans for both SIP and lumpsum investments in the key equity, debt, and hybrid asset classes.

According to the study, a Rs. 10,000 SIP in Direct Equity Funds started a decade ago resulted in a corpus of Rs. 28.1 lakhs as opposed to Rs. 26.6 lakhs in regular plans, earning an extra Rs.1.5 lakhs. A lump sum investment of Rs. 5 lakh delivered an average of Rs.21 lakhs in regular plans and Rs.23.09 lakhs in direct plans, earning an additional Rs.2.09 lakhs or 10% extra returns.

Excess wealth was created by funds in the Hybrid and Debt categories as well, with excess wealth of 6% and 3% for SIP and 11% and 6% for lumpsum investments, respectively.

In the 4.5 years since ET Money began offering Direct Mutual Funds on its platform, the impact of these excess returns has resulted in over Rs.183 crores of additional wealth for investors. And, with approximately Rs.18,16,920 crores (45% of the AUM of the Indian Mutual Fund industry) in Direct Plans, the total money saved on commissions and thus added to the returns of Indian investors would have been in the thousands of crores.

The top five AMCs in terms of extra wealth created on its platform, according to ET Money, are Axis Mutual Fund, Mirae Asset Mutual Fund, Quant Mutual Fund, Kotak Mutual Fund, and ICICI Prudential Mutual Fund.

AMCs are the top five extra wealth creators.

AMC Name Extra Returns Produced (in crores)

34.82 Axis Mutual Fund

24.16 Mirae Asset Mutual Fund

16.90 Quant Mutual Fund

11.58 SBI Mutual Fund

10.14 Kotak Mahindra Mutual Fund

10.08 ICICI Prudential Mutual Fund

“Direct plans remove the bias of commission and its introduction has been the single most effective initiative to curtail miss-selling in the MF industry,” said Mukesh Kalra, Founder & CEO of ET Money, upon reaching this industry milestone.

We consider ourselves fortunate to be one of the first platforms to assist Indians in gaining access to large-scale direct investment plans. We aim to significantly improve our users’ wealth-creation journeys over the next five years by compounding returns and increasing additional returns from Rs 183 crores to at least Rs 1,000 crores through the use of powerful decision-making tools and hyper-personalized investments via Genius.”

ET Money was founded in 2016 with the goal of simplifying the financial journey of new-age Indians. Over 10 million users from over 1400 cities now trust ET Money with over Rs. 30,000 crores in investments. Every month, over Rs. 600 crores of additional money is invested through ET Money, with a SIP being processed every 2.5 seconds on the platform. ET Money Genius, their most recent offering, provides investors with personalised investment strategies across mutual funds and stocks. They are constructing India’s largest financial subscription through this membership, which provides superior investment advisory that is completely aligned with the interests of investors at a fraction of the cost.

https://www.etmoney.com/ is the website address.