Retail investors are driving a structural shift in how India invests in mutual funds, with direct-plan assets under management (AUM) in the retail category rising from Rs 1.6 trillion in March 2021 to nearly Rs 7 trillion in March 2026, according to a report jointly prepared by the Association of Mutual Funds in India (AMFI) and CRISIL.
As a result, the direct-plan share of retail AUM climbed to 36.7 percent by March 2026, up from 21.4 percent five years earlier. Retail direct assets grew more than fourfold over the period, while regular-plan AUM only doubled, the report noted.
Direct vs regular: what's the difference
Every mutual fund scheme offers investors two routes. Regular plans are sold through intermediaries such as banks, agents and financial advisors, who earn a commission built into the scheme's expense ratio.
Direct plans skip this intermediation entirely: investors buy directly from the asset management company or through online platforms, and because no distributor commission is paid, direct plans typically carry a lower expense ratio than their regular-plan counterparts for the same scheme.
The AMFI-CRISIL report attributed the shift toward direct plans to "the steady expansion of self-directed investing, supported by digital access, greater product awareness and increasing sensitivity to costs."
The digital access factor
Direct plans are available through mutual fund company websites as well as investment apps and platforms such as Groww and Zerodha, which the report described as pivotal to their expansion.
These platforms have made it easier for investors to complete KYC online, set up and manage SIPs, and compare funds without needing a distributor, lowering the barrier for individuals to invest on their own.
Not all investor categories are moving the same way
The shift toward direct plans was sharpest among retail investors, but the pattern was uneven across investor categories.
High-net-worth individuals (HNIs) also increased their direct-plan share, from 28.8 percent to 35.1 percent, while NRI investors saw a similar rise, from 19.4 percent to 27.3 percent.
Corporate investors, by contrast, moved the other way: their direct-plan share fell from 78 percent to 72.2 percent, meaning regular plans gained ground in this segment.
Bank and financial institution investors, who remain the most concentrated in direct plans, saw a marginal dip, from 89.1 percent to 87.8 percent.
Because regular plans still carry larger average ticket sizes among individual investors, and institutional investors partly offset the retail decline in regular-plan share, the industry-wide split moved only modestly.
Direct plans accounted for 45.1 percent of total industry AUM in March 2026, up slightly from 43.4 percent in March 2021.
Account growth outpacing regular plans
The report also pointed to account-opening trends. In FY26, direct plans added 25.2 million net accounts compared with 14.2 million on the regular side, a gap that held even as equity markets turned volatile during the year.
Part of this growth, the report said, came from a surge of interest in gold and silver exchange-traded funds and fund-of-funds schemes in the second half of FY26, categories that saw sharp inflows and folio additions.
What it means for the distribution industry
The steady, broad-based rise in direct-plan adoption among retail and HNI investors suggests that India's traditional commission-based mutual fund distribution model faces gradually intensifying competition from low-cost, self-directed digital channels, even as regular plans continue to hold the larger share of overall industry assets.
Key Takeaway
Retail investors are increasingly shifting toward direct mutual fund plans, with direct retail AUM rising from Rs 1.6 trillion in March 2021 to nearly Rs 7 trillion in March 2026. Digital platforms, easier online investing and greater sensitivity to costs are helping accelerate the transition toward self-directed investing.
Reader questions
Frequently asked questions
What is a direct mutual fund plan?
A direct mutual fund plan allows investors to invest without a distributor or commission-earning intermediary. Because distributor commissions are not included, direct plans typically have lower expense ratios than regular plans of the same scheme.
How much retail money was invested in direct mutual fund plans by March 2026?
According to the AMFI-CRISIL report, retail direct-plan assets under management reached nearly Rs 7 trillion in March 2026, up from Rs 1.6 trillion in March 2021.
What share of retail mutual fund AUM was in direct plans in March 2026?
Direct plans accounted for 36.7 percent of retail mutual fund AUM in March 2026, compared with 21.4 percent in March 2021.
Why are retail investors moving to direct mutual fund plans?
The AMFI-CRISIL report attributes the shift to easier digital access, greater product awareness, growth in self-directed investing and increasing sensitivity to investment costs.
How many accounts did direct mutual fund plans add in FY26?
Direct plans added 25.2 million net accounts during FY26, compared with 14.2 million net accounts added by regular plans.
Are all investor groups shifting toward direct plans?
No. Retail, HNI and NRI investors increased their direct-plan shares, while corporate investors and banks and financial institutions recorded modest declines in the proportion of assets held through direct plans.
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