Guided Investments Outpace DIY Buys in Mutual Fund Direct Plans Over the Past 18 Months

The direct mutual fund landscape is witnessing a significant shift as guided investments through advisors and portfolio management services providers outperform self-driven do-it-yourself (DIY) approaches. 

According to Business Standard and AMFI data, over the past 18 months, professionally guided direct plan investments have demonstrated superior growth momentum, challenging the traditional DIY investment narrative.

Guided Investments Surge 64-65% vs DIY's 47% Growth

Those investing in direct schemes through investment advisers or portfolio management services (PMS) providers have seen their monthly average assets under management (AUM) rise 64-65% since January 2024, according to Association of Mutual Funds in India data. In contrast, DIY investors picking direct schemes without professional advice experienced 47% asset growth during the same period, whilst overall AUM grew 41%.

Professional Guidance Proves Value Despite Direct Plan Structure

The performance gap highlights the value of professional guidance even within the direct plan framework, which traditionally appeals to cost-conscious and self-directed investors. Investment advisors and PMS providers are successfully demonstrating that expertise in fund selection, timing, and portfolio management can justify their fees while maintaining the cost advantages of direct plans over regular mutual fund plans.

Read More: Indian Mutual Funds Overseas Assets Drop 5.6% to $8.3 Billion in FY25: RBI!

DIY Investors Face Common Pitfalls in Decision Making

Many DIY investors struggle with emotional decision-making, rushing exit decisions without considering exit loads and capital gains tax implications, and relying on free advice from multiple sources. These behavioural challenges often result in suboptimal investment outcomes despite the lower expense ratios that direct plans offer compared to regular plans with intermediary commissions.

Conclusion

The rise of guided investments in direct mutual fund plans, with 64-65% AUM growth versus DIY's 47%, demonstrates that professional advisory services are finding their place even in cost-focused investment structures. This shift challenges the traditional DIY approach whilst maintaining direct plan cost advantages, suggesting that hybrid models combining lower fees with professional guidance may represent the future of direct mutual fund investing.

Disclaimer: This blog has been written exclusively for educational purposes. The securities or funds mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in mutual funds are subject to market risks. Read all related documents carefully before investing.