Retail investors power direct mutual fund shift as digital access grows

Retail investors have led the shift towards ‘direct’ investing in mutual funds, with their do-it-yourself (DIY) assets growing more than fourfold over the past five years, while regular-plan assets under management (AUM) has only doubled during the period.

The strong growth in retail AUM, from ₹1.6 trillion in March 2021 to almost ₹7 trillion in March 2026, has led to a sharp rise in direct investing AUM during the five-year period. At the end of March 2026, the direct-plan share in retail AUM stood at 36.7 per cent, compared to 21.4 per cent in March 2021, show data released by the Association of Mutual Funds in India (AMFI) in a report.

“The shift in favour of direct plans reflects the steady expansion of self-directed investing, supported by digital access, greater product awareness and increasing sensitivity to costs,” the report, jointly prepared by CRISIL, stated.

The share of direct plans has also grown in the case of wealthy individual investors. However, the rise is not as steep as in the case of retail investors. The direct-plan share in high net-worth individual (HNI) AUM has grown from 28.8 per cent to 35.1 per cent in the five-year period. In the case of corporate investors, it is the regular plan that has gained share, from 22 per cent to nearly 29 per cent.

Mutual fund investors can choose between direct and regular plans. Regular plans, distributed by intermediaries such as banks and agents, include commissions for their services. Direct plans, by contrast, are commission-free and cater to investors comfortable navigating the process without assistance. These plans are available through mutual fund company websites and online platforms, such as Groww and Zerodha, which have been pivotal in their expansion.

In recent years, the number of accounts opened on the direct side has been outpacing regular plans. In the financial year 2026, direct plans of mutual fund schemes added 25.2 million net accounts, compared to 14.2 million on the regular side. The higher additions came despite an unfavourable equity market.

The higher additions on the direct side, experts said, were led by a surge in investor interest in gold and silver exchange-traded funds (ETFs) and fund of funds (FoFs). Gold and silver offerings by mutual funds saw a sharp rise in inflows and folio additions in the second half of FY26.