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Wipro 399.80↓-1.90(-0.47%)

Distributors gain as direct mutual fund investment platforms lose steam

Just 4% growth in registration of direct plan SIPs last year after 115% growth in 2021

Premium

The industry believes that the growth seen in direct plans in 2020 and 2021 was not sustainable as a lot of factors worked in favour of fintechs in the post-Covid period.

4 min read Last Updated : Jan 26 2023 | 11:07 PM IST

After growing exponentially for a few years, direct mutual fund investment platforms entered the slow lane in 2022.

The year-on-year growth in new systematic investment plan (SIP) registrations through direct plans came in at just 4.5 per cent in 2022 compared to 115 per cent in 2021 and 505 per cent in 2020. In comparison, SIP registrations via regular plans rose 19 per cent last year. It was the first year since 2020 when the growth in direct plan SIP registrations trailed that of the regular plans.

MFs’ direct plans are a low-cost option where investors do not have to pay any commission. There are many fintech platforms like Groww, Zerodha, Paytm Money, and Kuvera that allow investments in direct plans. MF houses also allow direct investments through their apps and websites. Regular plans, on the other hand, are sold by individual MF distributors, banks, and even some fintech players. Anyone selling regular plans of MFs gets commission.