Whalesbook
Direct mutual fund plans added more investor accounts than regular plans in fiscal year 2026, bucking expectations of market volatility. By February, direct plans added about 21 million investor accounts, significantly outpacing the 15 million added to regular plans.
Gold and Silver ETFs Drive Unexpected Growth
This stronger performance from direct plans, usually favored in good markets, coincided with a surge in investor interest in gold and silver ETFs and fund of funds (FoFs). Inflows and folio additions for precious metals surged in the latter half of FY26, driven by rising prices and geopolitical uncertainties.
Fintech Platforms Fueling DIY Trend
Fund officials and industry experts attribute the ongoing shift to direct plans to a post-Covid trend. Fintech platforms are key, offering easier investment and highlighting direct plans' cost savings by avoiding distributor commissions. Aashish Somaiyaa, CEO of WhiteOak Capital MF, credits fintech accessibility and AMFI's 'MF Sahi Hai' campaign for this strong growth.
Cost-Consciousness Sharper in Volatile Markets
Dhirendra Kumar, CEO of Value Research, highlighted increasing investor awareness of regular plans' higher costs. He noted that transparency from platforms and regulators like SEBI makes these costs clear, simplifying investor choices. Market volatility, rather than deterring this trend, sharpens cost-consciousness. Every basis point of expense drag hits returns harder during downturns.
Despite direct plans' faster growth, overall investor additions across the industry moderated in FY26. By February, 36 million new folios were added, down from 56.2 million the prior year. This suggests cautious retail investor sentiment, even as a growing segment chooses direct, lower-cost options.