Scripbox, one of India’s largest wealth managers with assets under management (AUM) in excess of Rs 18,500 crore, will offer direct plans of mutual funds (MFs) to its customers that will save them on a distributor’s commission fee.
A direct plan’s Net Asset Value (NAV) of a MF scheme does not come embedded with a distributor’s commission fee. This results in savings for investors and are typically meant for those individuals who wish to invest directly with the fund house, bypassing their distributors. However, registered investment advisors (RIAs) with the capital market regulator, Securities and Exchange Board of India (SEBI), also offer direct plans for a fee.
And here’s where Scripbox comes in.
Scripbox, one of India’s largest wealth-tech platforms, has been offering regular plans to its customers.
Scripbox earns through commissions that asset management companies (AMC) pay out of the NAV, thanks to customers’ MF investments.
The Bengaluru-headquartered company will charge a fee of Rs 349 per month for those customers, who wish to invest in MFs through direct plans. There is a Rs 100 discount for those investors, who wish to pay their fees for six months in advance.
Launched in January 2013, MF direct plans have grown through the years. As per the data provided to Moneycontrol by Value Research, 27 per cent of equity Assets Under Management (AUM) lies in direct plans, up from just 15 per cent at the end of 2017 and 3 per cent at the end of 2013, when direct plans were launched.
Data shows that retail investors, who are the majority in equity funds, have warmed up to direct plans as well.
To be sure, a chunk of these assets aren’t entirely Do-It-Yourself (DIY), as even RIAs are mandated to offer direct plans.
Similarly, 25 per cent of hybrid funds’ assets lie in direct plans, up from 16 per cent in 2015, as per the Value Research data.
“We want to give a choice to our customers between direct and regular plans. They can either choose to pay us directly or allow us to earn commission through their investments in regular plans,” says Sanjiv Singhal, Founder and Chief Operating Officer (COO), Scripbox.
Launched in 2012, Scripbox was one of India’s earliest robo advisors, more popularly known as wealth-tech advisors. The firm used to offer a basket of schemes catering to various financial goals.
However, earlier this year, it changed its approach. Now, it offers a single consolidated portfolio, based on an investor’s goals and aspirations that the individual fills up at the time of opening the account.
Scripbox has also acquired individual financial planners and distributors.
So far, the total tally of acquisitions stands at nine.
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