Direct mutual fund plans gain traction among long-term SIP investors

Direct plans of mutual funds continue to attract more investors through systematic investment plans (SIPs), marking a steady rise in their market share across investment horizons. The gains are particularly pronounced in long-term SIPs, where investors benefit significantly from lower expense ratios by bypassing intermediaries and investing directly with fund houses.

The uptick in direct plan adoption reflects a broader shift in investor behaviour, as awareness about cost differentials grows across the Indian investing public. Over extended periods, the compounding effect of lower charges in direct plans can result in substantially higher returns compared to their regular counterparts, making them increasingly attractive to financially-informed investors.

However, regular plans—which operate through distributors and financial advisors—continue to dominate the overall mutual fund landscape. These plans remain the preferred choice for many retail investors who rely on professional guidance for fund selection and portfolio management, offsetting the cost advantage of direct schemes.

Industry observers note that the momentum behind direct plans is expected to persist as digital platforms make investing more accessible and as financial literacy improves among Indian households. The competitive dynamics between direct and regular plans are reshaping how fund houses serve different investor segments.