Direct plan platforms give stiff competition to distributors in new SIP creation

An analysis of industry data done by Cafemutual shows that the proportion of direct plan and regular plan in the new SIP account is 45%:55%.

While direct plans account for 45% of the new SIP opened in 2024, its contribution in terms of AUM is 29%. Our analysis shows that the industry opened over 2.09 crore new SIP accounts in 2024 having AUM of Rs.85,200 crore in 2024.

On the other hand, the industry has opened 55% of the total SIP account or 2.55 crore SIPs under regular plans. The SIP AUM under regular plan with SIP longevity of less than one year is 71% or 2.10 lakh crore in 2024.

Overall, the industry has 4.64 crore SIP accounts having assets of Rs.2.95 lakh crore in longevity of less than 1 year.

VN Chalasani, CEO, AMFI believes that direct plan platforms have been opening large number of low-ticket SIP accounts. In some cases, the ticket size is even lower than the micro SIP of Rs.250. “In my opinion, the direct plan platforms aren’t making money today. They are simply focussing on adding more number of investors through SIPs. While it may not be making economic sense for them, it can become a Jan Dhan like movement for them. When Jan Dhan started in 2014, the traction wasn’t good for banks. But eventually, money started flowing to Jan Dhan accounts. Currently, even private banks are interested in opening Jan Dhan accounts,” he added.

Chalasani said that MFDs generally do large ticket SIPs as small ticket SIPs don’t make business sense for them. Also, they focus on long term investments, and it is reflected in the fact that majority of SIPs having longevity of over 5 years are opened by distributors.

An MD and CEO of the top fund house feels that the direct plan platforms focus on bringing in very small ticket SIPs. In fact, one of the platform has started offering a daily SIP of Rs.21, which is much lower than the concept of micro SIP. On the other hand, MFDs bring in high ticket size SIP investors. “I have seen MFDs bringing SIP cheque of Rs.5 lakh per month for one scheme,” he revealed.

Further, analysis of SIP AUM of the MF industry reveals that the largest proportion of SIP AUM is in duration of over 5 years.

Of the total SIP AUM of Rs.13.63 lakh crore, Rs.4 lakh crore or 29% of the total SIP AUM is invested for over 5 years in December 2024.

On the other hand, 22% of the SIP AUM has longevity of less than a year. The data shows that Rs.2.95 lakh crore of the SIP AUM has longevity of up to a year. 

Direct plan

The majority of SIP AUM in direct plans has longevity of less than a year. The industry data shows that over 30% of the total SIP AUM in direct plan or Rs. 85,200 crore has been active for less than a year. 

SIP AUM with longevity of over 5 years accounts for 19% of the total SIP AUM.

Here's a table below showing the data for direct SIP AUM :

Regular plan 

Regular plan SIP assets have a better longevity compared to direct plan SIP AUM.

The data shows that 32% of total SIP AUM in regular plan has stayed invested for over 5 years. 

On the other than, 19% of the total SIP in regular plan has a longevity of less than a year. 

Here's a table below showing the data for regular AUM: