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Distributors create long term SIP investors. The industry data shows that while over 30% of SIP AUM in regular plan is invested for over 5 years, 17% of SIP AUM in direct plan has stayed active for over 5 years.
Regular plan
Of the total SIP AUM Rs.8.68 lakh crore in regular plan, Rs.2.62 lakh crore or 30% remain invested for more than 5 years. In terms of SIP accounts, 16% or 84 lakh SIP accounts are active for over 5 years.
The data shows that 10% of the total SIP assets are active over 4 years but have not completed 5 years, 11% SIP assets fall between 3-4 years, 12% between 2-3 years and 17% between 1-2 years.
20% of the total SIP assets have longevity of less than a year.
Let’s look at the table to know more about SIP longevity in regular plans:
|
Regular Plan |
||||
|
SIP accounts continuing (In Years) |
No. of SIP accounts |
% SIP accounts |
AUM (crore) |
AUM% |
|
> 5 years |
83,71,793 |
16% |
2,62,185 |
30% |
|
> 4 years up to 5 years |
31,41,153 |
6% |
89,585 |
10% |
|
> 3 years up to 4 years |
30,10,471 |
5% |
91,008 |
11% |
|
> 2 years up to 3 years |
73,10,128 |
14% |
1,05,736 |
12% |
|
> 1 year up to 2 years |
99,55,814 |
19% |
1,44,689 |
17% |
|
Less than < 1 year |
2,11,42,706 |
40% |
1,75,229 |
20% |
|
Total |
5,29,32,065 |
100% |
8,68,432 |
100% |
Direct plan
17% of the total SIP AUM through direct plans remains invested for more than 5 years. This amounts to Rs.35,000 crore out of a total of Rs.2 lakh crore in SIPs.
In terms of SIP accounts, 5% of total SIP accounts, which is 16.53 lakh accounts, have been active for over 5 years.
Moreover, the data reveals that 29% of the total SIP AUM, which is Rs. 60,000 crore, has a longevity of less than a year.
Let’s look at the table to know more about SIP longevity in direct plans:
|
Direct Plan |
||||
|
SIP accounts continuing (In Years) |
No. of SIP accounts |
% SIP accounts |
AUM (crore) |
AUM% |
|
> 5 years |
16,52,926 |
5% |
34,741 |
17% |
|
> 4 years up to 5 years |
17,38,836 |
6% |
18,646 |
10% |
|
> 3 years up to 4 years |
23,49,861 |
8% |
20,486 |
10% |
|
> 2 years up to 3 years |
49,43,560 |
16% |
28,852 |
14% |
|
> 1 year up to 2 years |
50,55,057 |
16% |
40,882 |
20% |
|
Less than < 1 year |
1,52,98,994 |
49% |
59,627 |
29% |
|
Total |
3,10,39,234 |
100% |
2,03,234 |
100% |
Mumbai MFD Sadashiv Phene points out that direct plans have no hand-holding. “Regular plans are managed by distributors and many distributors advocate goal-oriented SIPs which are long term in nature,” said Sadashiv.
Pune MFD Harshavardhan Bhusari of Fin Pals said that investors hire a professional to invest their money with specific goals in mind in regular plans. He said “Investor's goals are often attached with some emotions, which makes investors less likely to withdraw their money and more likely to stick with their investments for a longer time. On the other hand, in direct plans, investors often make decisions based on past performance or personal preference without professional guidance.”
