Passive Investors Become Active

The Indian Mutual fund industry is well past Rs.35 trillion in Asset Under Management (AUM) as on July 31,2021.

The top 30 cities (T-30) constitute more than 80% of the investment (Rs. 29.25 trillion out of the total Rs. 35.32 trillion). Investors in T-30 cities prefer to invest directly in MF schemes and started avoiding Regular plans through intermediaries due to hefty commissions involved in the amount paid.

The gap between AUM under Direct plans and Regular plans are getting narrower and negligible. Even in Beyond 30 (B-30) cities, the AUM under Direct plans catching up with Regular plans with every passing day. The gap between Direct and Regular plans has come down from Rs. 0.87 tn on 31.03.2020 to Rs. 0.39 tn on 31.06.2020 in T-30 cities.

Direct Vs Regular : AUM Gap Narrows in Big Cities

Passive investors prefer MFs, but such passive investors are becoming active in picking up their own schemes directly without involving any financial intermediary. This is a new development in the financial market. Obviously Passive investors are becoming active.