The Shift To Direct Plans Is Growing, But Regular Plans Keep Investors For The Long Term

Mutual fund investors taking the regular-plan route appear more inclined to hold on to their investments for the long haul than direct-plan investors.

As of March 2026, 23.5 per cent of regular-plan investments had been held for more than five years, as against 14 per cent of direct-plan investments, according to the Association of Mutual Funds in India (Amfi)-Crisil Factbook 2026. The difference was even bigger for Systematic Investment Plan (SIP) investments. About 34.4 per cent of regular-plan SIP assets had been invested for more than five years, compared with 19.9 per cent for direct plans.

This is not a new trend. Regular plans also had a higher share of long-term investments in March 2021. While the data does not show that distributor advice alone leads to longer holding periods, it does suggest that investors using the regular route may be more likely to stay invested through market ups and downs.

“When markets are doing well, staying invested is easy. The real test comes when markets fall, and investors start worrying about their money. For those investing larger amounts through SIPs, a distributor can help them stay calm, avoid hasty decisions and continue with the plan,” said Kumar Shikhar, a mutual fund distributor.

That does not mean regular plans are inherently better than direct plans. Direct plans have a lower expense ratio because they do not pay distributor commissions, making them attractive for investors who are comfortable researching funds, making investment decisions and managing their portfolios on their own.

The numbers, however, show that the two routes are attracting different kinds of investors.

Direct Adoption Rises, But Regular Plans Remain The Main Route

The direct route has expanded steadily over the past five years. Direct-plan assets under management (AUM) stood at Rs 33.28 lakh crore in March 2026, accounting for 45.1 per cent of industry assets, up from 43.4 per cent in March 2021.

Regular plans, meanwhile, still held the larger share at 54.9 per cent, with AUM of Rs 40.46 lakh crore.

“The shift in favour of direct plans reflects the steady expansion of self-directed investing, supported by digital access, greater product awareness and increasing sensitivity to costs. At the same time, the continued dominance of regular plans highlights the enduring role of intermediaries in facilitating investment decisions and servicing a broad investor base,” Amfi and Crisil said in the Factbook.

The direct-regular mix looks quite different across institutional and individual investors.

Banks and financial institutions held 87.8 per cent of their mutual fund assets through direct plans in March 2026. The corresponding figures for corporates and Foreign Institutional Investors (FIIs) were 72.2 per cent and 69 per cent.

Together, these three investor groups held Rs 19.05 lakh crore through direct plans, compared with Rs 8.73 lakh crore through regular plans. Their in-house treasury capabilities and higher sensitivity to cost-efficient execution make the direct route a natural fit for institutional investors.

Individual investors are moving in the same direction, but at a slower pace.

Retail Investors Are Embracing Direct Plans

Retail investors increased their direct-plan share from 21.4 per cent in March 2021 to 36.7 per cent in March 2026. Among high-net-worth individuals (HNIs), the share rose to 35.1 per cent, while it reached 27.3 per cent among non-resident Indians (NRIs).

Regular plans, nevertheless, remain the larger route for individuals.

The composition of individual AUM also tells an interesting story. In direct plans, the retail share rose to 42.9 per cent in March 2026 from 35.5 per cent in March 2021. Over the same period, the HNI share fell to 52.3 per cent from 60.3 per cent.

In regular plans, the trend moved the other way. HNIs accounted for 52.6 per cent of AUM in March 2026, up from 50.3 per cent five years earlier, while the retail share fell to 40.5 per cent from 43.8 per cent.

In other words, direct investing is no longer limited largely to affluent, self-directed investors. Retail participation is becoming a bigger part of that pool.

Young Investors Lean Towards Direct SIPs

Among investors aged 18-34, the share of direct SIP AUM stood at 22.7 per cent in March 2026, compared with 22.6 per cent in March 2021. The regular-plan share for the same age group fell from 14.4 per cent to 11.9 per cent.

Among investors aged over 58, regular plans also gained share, rising to 22.4 per cent in March 2026 from 18.5 per cent in March 2021.

The trend fits with the growing use of digital investment platforms among younger investors, while older investors continue to place greater value on distributor-led assistance.

Women investors show a similar age-linked pattern. Among women below 25, direct plans accounted for around 27 per cent of AUM in March 2026, up from about 18 per cent in March 2021. For women aged 25-44, the direct share rose to nearly 36 per cent from 22 per cent.

But among women aged 45-58 and above 58, direct-plan shares were lower at about 24 per cent and 22 per cent, respectively. Regular plans continued to account for more than three-fourths of assets in both groups.

Bigger SIPs Still Lean Towards Regular Plans

The bigger the SIP commitment, the stronger the tilt towards regular plans. Regular plans accounted for 77 per cent of SIP AUM in the Rs 1,001-5,000 bracket, 72 per cent in the Rs 5,001-10,000 bracket and 78 per cent for SIPs above Rs 10,000.

Direct plans have a stronger presence at the lower end. SIPs of Rs 500-1,000 accounted for 29 per cent through the direct route, compared with an average of 24 per cent across the higher-ticket categories.

Among women investors, direct plans lead only at the lowest SIP ticket size. Direct plans accounted for 60 per cent of SIP accounts below Rs 500. Once the investment amount moved up, regular plans took the lead, accounting for 62 per cent of SIPs in the Rs 500-1,000 range, 64 per cent in Rs 1,001-5,000, 62 per cent in Rs 5,001-10,000 and 77 per cent for SIPs above Rs 10,000.

“This pattern indicates that smaller SIPs are more likely to be initiated through digital and self-directed channels, while higher and more persistent SIP commitments tend to be distributor-led,” Amfi-Crisil said.

Distributors Remain Important Despite The Direct-Plan Shift

The rise of direct plans has not made mutual fund distributors irrelevant. The mutual fund industry’s AUM rose from Rs 31.43 lakh crore in fiscal 2021 to Rs 73.73 lakh crore in fiscal 2026, a 135 per cent increase. Over the same period, the registered Mutual Fund Distributor (MFD) workforce grew from around 2.43 lakh to 3.40 lakh, a 40 per cent rise.

The distributor base is also spreading beyond the biggest cities. Between March 2021 and March 2026, MFDs in B30, or beyond the top 30 cities, grew 61 per cent, compared with 25 per cent growth in T30 markets.

Amfi-Crisil said the increasing share of B30 MFDs is “likely being supported by recent regulatory initiatives designed to improve mutual fund penetration in smaller cities”, including additional distributor incentives for eligible investments from B30 locations.

Direct plans are likely to keep gaining as investors become more comfortable with digital platforms and have easier access to information. But the longer holding periods seen in regular plans show that cost is not the only factor investors need to consider. Staying invested through market cycles matters just as much.