Direct plans share in mutual fund SIPs reaches around 40 pc

Online investment options are rapidly changing the mutual fund industry as the share of direct plans in SIP (systematic investment plan) accounts has reached around 40 per cent from nearly 21 per cent four years ago.

This change in trade shows that people are now giving more preference to investing through direct channels.

Mutual fund investors can choose between both direct and regular plans.

Regular plans of a mutual scheme can be bought through agents and banks. Being an intermediary in distribution, they charge a commission for their services, which is deducted from your investment.

Meanwhile, direct plans of a mutual scheme are commission-free and investors have to complete the investment process on their own.

The share of direct plans was 39 per cent in 10.1 crore SIP accounts at the end of October 2024. This figure was 21.5 per cent in October 2020 and 17 per cent in March 2020.

This change in trend has also positively affected SIP Assets Under Management (AUM). According to industry data, the AUM linked to direct plan SIPs has increased to Rs 2.7 lakh crore by October 2024, from Rs 29,340 crore in March 2020. During this period, the share of direct plans in SIP AUM has increased by 12.2 per cent to 20.3 per cent.

The SIP inflow in October this year was Rs 25,323 crore. This was the first time in the country that the SIP figure has crossed the level of Rs 25,000 crore.

The continuously increasing SIP figure shows that people prioritise investing in mutual funds through SIP.

Apart from this, the mutual fund industry's total assets under management (AUM) increased to a new all-time high of Rs 66.98 lakh crore in October. It has increased by 0.25 per cent on a month-on-month (MoM) basis. It was Rs 66.82 lakh crore in September.