SIPs under regular plan shows better longevity
The regular plan still forms a major part of the mutual fund industry assets under management (AUM), especially among retail investors. However, even in terms of systematic investment plan (SIP), regular plan scores over direct plans. There were around 90 lakh SIP accounts in direct plans, accounting for 24 per cent of the total SIP accounts as of March 2021. On the flip side, the regular plan accounts for 76 per cent of the total SIP accounts, having 2.80 crore SIP accounts.
|
Plans
|
SIP accounts
|
Proportion (per cent)
|
|
Direct plan
|
89,86,655
|
24
|
|
Regular plan
|
2,82,67,206
|
76
|
|
Total
|
3,72,53,861
|
100
|
On further analysing the AMFI data, it has been observed that SIP accounts under regular plan survive longer than that of the direct plan. In direct plans, only 2 per cent of the total SIP accounts are over five years old when compared to 10 per cent in regular plans. This means that out of a total of 90 lakh SIP accounts under direct plans, about 2 lakh SIP accounts are over five years old whereas, SIP accounts in regular plans depict better longevity. From over 2.8 crore SIP accounts in regular plans, 27 lakh SIP accounts are over five years old.
|
Period
|
Direct SIP accounts
|
Proportion (per cent)
|
Regular SIP accounts
|
Proportion (per cent)
|
|
Above 5 years
|
1,96,124
|
2
|
26,91,098
|
10
|
|
Above 4 years up to 5 years
|
1,83,937
|
2
|
21,87,874
|
8
|
|
Above 3 years up to 4 years
|
4,75,522
|
5
|
44,81,150
|
16
|
|
Above 2 years up to 3 years
|
12,15,147
|
14
|
56,91,497
|
20
|
|
Above 1 year up to 2 years
|
22,50,129
|
25
|
52,60,182
|
19
|
|
Below 1 year
|
46,65,796
|
52
|
79,55,405
|
28
|
|
Total
|
89,86,655
|
100
|
2,82,67,206
|
100
|
|
Data is as of March 2021.
|
Furthermore, of the total SIP accounts of 2.8 crore, 48 per cent (43 lakh SIP accounts) under direct plans, and 72 per cent (2 crore SIP accounts) under regular plans are older than one year.
Various mutual fund investment platforms tout about saving one per cent by investing in a direct plan. However, many investors forget the role of a financial advisor. Direct plans are meant for those who have adequate knowledge about the market, solid experience of investing, and time to dedicate towards managing investments. If you are someone who doesn’t stratify all of the above-mentioned criteria, then you should ideally seek the help of a financial advisor.