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SIP investors coming through distributors stay longer compared to those who invest in mutual funds via direct plans.
Industry data reveals that 27% of the total SIP AUM in regular plan has stayed invested for over 5 years. Of the SIP AUM of Rs.6.50 lakh crore in regular plans, Rs.1.80 lakh crore has been invested for over 5 years. In terms of number of accounts, 16% of the total SIP accounts are active for more than 5 years.
On the other hand, 15% of the total SIP AUM in direct plan have longevity of over 5 years. In terms of SIP accounts, 4% of total SIP accounts have been active for over 5 years.
Let’s look at these tables to know more about SIP longevity in regular plans and direct plans:
Regular plan
|
Regular Plan |
||||
|
SIP accounts continuing |
No. of SIP |
% SIP |
AUM (cr) |
AUM% |
|
> 5years |
71,36,386 |
16% |
1,79,220 |
27% |
|
> 4 years upto 5 years |
36,66,488 |
8% |
70,304 |
11% |
|
> 3 years upto 4 years |
29,72,058 |
7% |
80,748 |
12% |
|
> 2 years upto 3 years |
49,88,732 |
11% |
82,772 |
13% |
|
> 1 year upto 2 years |
97,84,710 |
22% |
1,03,708 |
16% |
|
Less than < 1 year |
1,61,46,978 |
36% |
1,37,925 |
21% |
|
Total |
4,46,95,352 |
100% |
6,54,676 |
100% |
Direct plan
|
Direct Plan |
||||
|
SIP accounts |
No. of SIP |
%SIP |
AUM (cr) |
AUM% |
|
> 5years |
9,39,849 |
4% |
20,564 |
15% |
|
> 4 years upto 5 years |
12,02,608 |
6% |
13,256 |
10% |
|
> 3 years upto 4 years |
15,48,494 |
7% |
16,964 |
12% |
|
> 2 years upto 3 years |
30,34,331 |
14% |
19,439 |
14% |
|
> 1 year upto 2 years |
59,24,488 |
27% |
28,608 |
21% |
|
Less than < 1 year |
91,91,911 |
42% |
40,102 |
29% |
|
Total |
2,18,41,681 |
100% |
1,38,933 |
100% |
Rajkot MFD Ramkumar Barchha feels that MFDs handhold their clients and constantly guide them to overcome behavioral biases. He said, “Most people exit SIP when they see volatility and this is where MFDs come into picture. They constantly remind their clients to focus on their financial goals and avoid market noise.”
Ajit Menon CEO, PGIM India Mutual Fund points out that the AUM of SIP AUM of direct plans is comparatively lower compared to SIP AUM in regular plans. He also said that many investors do not invest keeping in mind a goal in mind. MFDs, on the other hand, help people identify their financial goals and encourage them to stay invested for long term.
