Under the direct plan mode, investors can directly invest in mutual fund schemes without involving distributors or agents. They are required to visit fund house website and follow the process to invest in such schemes.
Since no fees would have to paid to distributors, expense ratio would be lower as compared to regular plans, which would eventually give higher returns to investors. Almost all the mutual fund houses provide direct plans, while big ones like HDFC MF, Reliance MF, ICICI Prudential MF, Axis MF, UTI MF and Birla Sunlife MF are planning to increase their shares through this route. Besides, Quantum Mutual Fund only deals in direct plans.
Most of these fund houses have specialised teams to look into these plans. In addition, they are adopting digital modes such as internet and mobiles to sell their MF products. "Direct plans are purchased directly from MF houses, bypassing the distributor channel. The savings on <g data-gr-id="35">commission</g> are passed on to investors and fund houses do not have to give any fee to agents. Therefore, it is a win-win situation for Asset Management Companies (AMCs) as well as investors," Quantum Mutual Fund CEO Jimmy Patel said. He said that institutional investors and high <g data-gr-id="31">networth</g> individuals (HNIs) are opting for direct plans as they are far more capable at taking informed investment decisions.
Fund mop-up via preferential allotment up 50%
Fund-raising by <g data-gr-id="78">issuance</g> of shares to promoters and shareholders on <g data-gr-id="79">preferential</g> basis by firms has surged 50 per cent to over Rs 17,000 crore in April-June quarter of the current fiscal. Market experts say that <g data-gr-id="75">fund raising</g> through this route is likely to go up further as many companies have lined up plans of mobilising funds on preferential basis.