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An analysis of SIP longevity done by Cafemutual shows that investors tend to stay invested longer through MFDs.
The analysis shows that while 31% of SIP AUM in regular plans is invested for over 5 years, such a proportion was 18% in direct plans.
Regular plan
Of the total SIP AUM of Rs.10 lakh crore in the regular plan, Rs.3 lakh crore or 31% has remained invested for more than 5 years. In terms of SIP accounts, 16% or close to 90 lakh SIP accounts have been active for over 5 years.
Further, 10% of the total SIP assets in regular plan was active over 4 years but has not completed 5 years. 20% of the total SIP assets had a longevity of less than a year.
Let’s look at the table below to know more about SIP longevity in regular plans.
|
SIP accounts continuing (In Years) |
No. of SIP accounts |
% SIP accounts |
AUM (crore) |
AUM% |
|
> 5 years |
89,76,689 |
16% |
3,09,996 |
31% |
|
> 4 years up to 5 years |
29,55,558 |
5% |
1,03,257 |
10% |
|
> 3 years up to 4 years |
36,63,341 |
7% |
97,086 |
10% |
|
> 2 years up to 3 years |
79,49,586 |
14% |
1,24,278 |
12% |
|
> 1 year up to 2 years |
1,04,33,853 |
18% |
1,67,080 |
17% |
|
Less than < 1 year |
2,24,55,311 |
40% |
2,00,214 |
20% |
|
Total |
5,64,34,338 |
100% |
10,01,911 |
100% |
Direct Plan
18% of the total SIP AUM in direct plans has remained invested for more than 5 years. This amount was close to Rs.43,000 crore out of a total of Rs.2.40 lakh crore in SIP AUM.
In terms of SIP accounts, 6% of total SIP accounts, which is 21.39 lakh accounts were active for over 5 years.
Further, 30% of the total SIP AUM, which is Rs. 72,000 crore, had a longevity of less than a year.
Let’s look at the table below to know more about SIP longevity in direct plans.
|
SIP accounts continuing (In Years) |
No. of SIP accounts |
% SIP accounts |
AUM (crore) |
AUM% |
|
> 5 years |
21,38,636 |
6% |
42,878 |
18% |
|
> 4 years up to 5 years |
19,52,254 |
6% |
21,712 |
9% |
|
> 3 years up to 4 years |
28,71,350 |
9% |
22,659 |
9% |
|
> 2 years up to 3 years |
46,12,265 |
14% |
34,564 |
14% |
|
> 1 year up to 2 years |
49,22,621 |
15% |
47,620 |
20% |
|
Less than < 1 year |
1,69,35,498 |
51% |
72,448 |
30% |
|
Total |
3,34,32,624 |
100% |
2,41,881 |
100% |
Mumbai MFD Hemant Rustagi of Wiseinvest Advisors attributes this to behavioural aspect of investors. He said, “Investing in SIPs through direct plans is easier. In absence of guidance, direct investors often react to market fluctuations, tending to panic and stop their SIPs when the market declines. In regular plans, investors typically have specific goals in mind and constant guidance of distributors.”
Guwahati MFD Rajesh Sarawgi believes that direct plan investors follow past performance. He said, “Many direct plan investors often change funds to seek higher returns by looking at the recent performance. They prioritize short-term gains, ignoring long-term benefits and tend to lose money by relying on past returns without considering future potential. On the other side, regular plan investors have a long-term focus. The biggest advantage of regular plan is that the investor's portfolio is managed by an MFD who helps them understand the benefits of long-term investment.”
