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A report released by Motilal Oswal Financial Services reveals that online direct plan distributors have witnessed high incidence of SIP discontinuation. As a result, their net SIP count is negative.
The report said, “The online distributors have been in the ecosystem for a long period (7-8 years) now. However, unlike their impact on the broking industry, they have not yet been able to disrupt the MF distribution space. In fact, in the recent past, a few of the online distributors have seen a negative net SIP count.”
While offline distributors sell SIPs with a minimum tenure of 12 months, online players have been promoting SIPs of shorter durations such as 3-6 months, which has affected the renewal rates, as the returns for such short periods have been poor, points out the report.
