New Delhi, Aug 21: Around 96 per cent of consumers are unaware of the existence of direct plans of mutual funds, according to a survey conducted by Paisabazaar.com, a marketplace for lending and investment products. The company arrived at the conclusion after surveying over 25,000 respondents last month.
Direct plans of mutual funds offer comparatively higher returns than regular plans. Moreover, there are no commission or distribution fees on direct plans of mutual funds. To give you an idea, the difference in returns between direct plans of mutual funds and regular plans will be around Rs 68 lakh for a Systematic Investment Plan (SIP) of Rs 10,000 for 25 years, at an annualized return of 15 per cent. (Corpus created through direct plans will be Rs 3.97 crore and Rs 3.29 crore through regular plans.) Under Systematic Investment Plans (SIP), you invest a fixed amount at regular intervals to average out your cost in the long run.
Yashish Dahiya, Co-founder & CEO of PolicyBazaar Group said, “While everyone in the industry is aware that direct plans offer better returns than regular plans, there’s hardly been any consumer awareness initiative around it.” PolicyBazaar Group is the parent company of Paisabazaar.com, Policybazaar.com and Docprime.com. Dahiya added, “As a consumer brand, we believe in offering what’s best for our customers, whether it’s free credit score or direct plans of mutual funds. The challenge is to make consumers aware of the distinct advantage direct plans have in the form of higher returns.”
“While a commission of 1%-2% in regular plans may seem insignificant initially, returns from direct plans can easily be 18%-20% higher in the long run,” added Dahiya.