Thread by @ETMONEY

Direct Plans in #mutualfunds completed 10 years on January 1, 2023.

These plans don’t include commissions, and hence you earn more.

But how much more?

We crunched SIP and Lumpsum data for the past decade to figure it out.

The results are surprising.

A thread 🧵

Let’s begin with some numbers.

Say you chose 3 schemes – an equity, a debt, and a hybrid fund.

You have a monthly SIP of Rs 10,000 each in these schemes for a decade.

👉 Your excess returns are Rs 5.4 lakh (or 6.4%) more than the regular plan.

The trend is similar for lumpsum investments.

Say you invested Rs 5 lakh at once in direct plans of each of these 3 schemes.

Total lumpsum amount = Rs 15 lakh

In this case, the corpus would be bigger by Rs 7.9 lakh (or 10.3%).

Check image ⬇️

The biggest difference is in the #equity funds.

For a monthly SIP of Rs 10,000, on average, the corpus would be bigger by Rs 1.6 lakh (or about 6%) more than regular plans.

For a lumpsum of Rs 5 lakh, the corpus would be Rs 2.08 lakh (about 10%) more in 10 years.

Within equity, the difference is most pronounced in the Small Cap category.

And it’s the lowest in the Flexi Cap category.

See the charts below. ⬇️

Hybrid & Debt Funds aren’t far behind as well.

An SIP of Rs 10,000 in Hybrid Funds, on average, delivered Rs 1.18 lakh (6%) higher corpus.

In Debt Funds, it was Rs 55,000 (4%) more on average.

Check the image to see the difference in various hybrid and debt fund categories⬇️

What about the excess return for lumpsum investments in Hybrid and Debt?

For a Lumpsum of Rs 5 lakh, hybrid funds generated Rs 1.5 lakh (11%) more in direct plans.

Direct Debt funds had excess returns of Rs 60,000 (6%) than regular plans.

Check image ⬇️

Now, some data about the wealth ET Money investors created by using the platform.

In the past 4.5 years, investors have invested Rs 14,873 crore in direct plans through us.

The extra wealth created by ET Money investors amounts to a whopping Rs 183.1 crore.

Of this Rs 183.1 crore, about 75% of the excess return came from just 10 AMCs

The top 10 schemes contributed about 35%.

Check the funds below. ⬇️

What has worked for ET Money investors?

👉At ET Money, we have solutions like the Fund Report Card that tell you if a scheme is genuinely a top fund.

👉Plus, we also have a Portfolio Health Check feature that keeps evaluating your existing investments.

That’s not all.

We launched ET Money Genius a year back, making direct plans even more rewarding.

Genius' asset allocation and rebalancing strategies, built with super low-cost direct plans of index funds, ensure that you make the best of all market conditions.

And this is just a start!

We will offer a lot more to help you make the most of direct plans.

After all, as more investors realise the benefits of direct plans, they will be able to create enormous wealth in the future.

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